Bài giảng Nền kinh tế thực

BÀI GIẢNG 5: NỀN KINH TẾ THỰC ĐỖ THIÊN ANH TUẤN TRƯỜNG CHÍNH SÁCH CÔNG VÀ QUẢN LÝ ĐẠI HỌC FULBRIGHT VIỆT NAM 1 A large income is the best recipe for happiness I ever heard of. —Jane Austen GDP BY INDUSTRIAL ORIGIN AT CURRENT MARKET PRICES (VND BILLION) 2 2017 2018 2017 2018 5.005.975 5.542.332 100% 100% Agriculture, forestry, and fishing 768.161 813.724 15% 15% Mining and quarrying 373.931 408.228 7% 7% Manufacturing 767.495 886.580 15% 16% Electricity, gas, steam, and air-conditioning supply 217.443 250.806 4% 5% Water supply; sewerage, waste management, and remediation activities 25.946 28.193 1% 1% Construction 287.137 323.466 6% 6% Wholesale and retail trade; repair of motor vehicles and motorcycles 536.259 602.584 11% 11% Accommodation and food service activities 191.743 209.390 4% 4% Transportation and storage 133.073 149.478 3% 3% Information and communication 34.293 37.793 1% 1% Financial and insurance activities 273.809 295.444 5% 5% Real estate activitiesb 239.868 253.870 5% 5% Professional, scientific, and technical activitiesb 64.258 69.341 1% 1% Administrative and support service activitiesb 18.729 20.411 0% 0% Public administration and defense; compulsory social security 137.635 150.004 3% 3% Education 177.619 203.193 4% 4% Human health and social work activities 132.507 151.542 3% 3% Arts, entertainment, and recreation 29.990 32.418 1% 1% Other service activities 87.620 94.301 2% 2% Activities of households as employers; undifferentiated goods- and services-producing activities of households for own use 8.082 9.124 0% 0% Gross value added at basic prices 4.505.601 4.989.887 90% 90% Plus: Taxes less subsidies on production and imports 500.374 552.444 10% 10% WHAT DETERMINES THE TOTAL PRODUCTION OF GOODS AND SERVICES? • Factors of production are the inputs used to produce goods and services. The two most important factors of production are capital and labor. Y = F(K, L) • Many production functions have a property called constant returns to scale. A production function has constant returns to scale if an increase of an equal percentage in all factors of production causes an increase in output of the same percentage. zY = F(zK, zL) • Because we assume that the supplies of capital and labor and the technology are fixed, output is also fixed. Y = F(ഥ𝐾, ത𝐿) = ത𝑌 3 THE DECISIONS FACING A COMPETITIVE FIRM Y = F(K, L) • Profit = Revenue – Labor costs – Capital costs = PY – WL – RK • Profit = PF(K, L) – WL – RK 4 Source: 123rf.com THE MARGINAL PRODUCT OF LABOR • The marginal product of labor (MPL) is the extra amount of output the firm gets from one extra unit of labor, holding the amount of capital fixed. MPL = F(K, L + 1) – F(K, L) • Most production functions have the property of diminishing marginal product: holding the amount of capital fixed, the marginal product of labor decreases as the amount of labor increases. 5 FROM THE MARGINAL PRODUCT OF LABOR TO LABOR DEMAND • The Production Function This curve shows how output depends on labor input, holding the amount of capital constant. • The marginal product of labor MPL is the change in output when the labor input is increased by 1 unit. • As the amount of labor increases, the production function becomes flatter, indicating diminishing marginal product. 6 Output, Y Labor, L MPL MPL MPL 1 1 1 The slope if the production function equals the MPL As more labor is added, the MPL declines F(ഥ𝐾, 𝐿) HOW IS MPL DETERMINED? • ∆Profit = ∆Revenue – ∆Cost = (P x MPL) – W • The competitive firm’s demand for labor is determined by: P x MPL = W MPL = W/P • W/P is the real wage —the payment to labor measured in units of output rather than in dollars. 7 Real wage Quantity of labor demanded Unit of labor, L Unit of output MPL, Labor demand THE MARGINAL PRODUCT OF CAPITAL • The marginal product of capital (MPK ) is the amount of extra output the firm gets from an extra unit of capital, holding the amount of labor constant. MPK = F(K + 1, L) – F(K, L) • ∆Profit = ∆Revenue – ∆Cost = (P x MPK) – R • To maximize profit, the firm continues to rent more capital until the MPK falls to equal the real rental price: MPK = R/P 8 ECONOMIC PROFIT • Economic profit = Y – (MPL x L) – (MPK x K) Y = (MPL x L) + (MPK x K) + Economic profit • If the production function has the property of constant returns to scale, as is often thought to be the case, then economic profit must be zero. That is, nothing is left after the factors of production are paid. F(K, L) = (MPK x K) + (MPL x L) 9 THE COBB–DOUGLAS PRODUCTION FUNCTION • Capital Income = MPK x K = 𝛼𝑌 • Labor Income = MPL x L = (1 - 𝛼)Y • Where 𝛼 is a constant between zero and one that measures capital’s share of income. • Cobb–Douglas production function: F(K, L) = 𝐴𝐾𝛼𝐿1−𝛼 • Where A is a parameter greater than zero that measures the productivity of the available technology. 10 THE MARGINAL PRODUCT OF LABOR AND MARGINAL PRODUCT OF CAPITAL • The marginal product of labor MPL = (1 - 𝛼) 𝐴𝐾𝛼𝐿−𝛼 = (1 - 𝛼)Y/L • Marginal product of capital MPL = 𝛼 𝐴𝐾𝛼−1𝐿1−𝛼 = 𝛼 Y/K 11 EXPENDITURE ON GDP AT CURRENT MARKET PRICES (VND BILLION) 12 2017 2018 2017 2018 Expenditure on GDP at current market prices 5.005.975 5.542.332 100% 100% Final consumption expenditure 3.731.554 4.103.655 75% 74% Household final consumption 3.405.750 3.745.063 68% 68% Government final consumption 325.804 358.591 7% 6% Gross capital formation 1.330.694 1.470.550 27% 27% Gross fixed capital formation 1.190.475 1.321.906 24% 24% Changes in inventories 140.220 148.645 3% 3% Exports of goods and services 5.085.742 5.865.550 102% 106% Less: Imports of goods and services 4.945.460 5.679.497 99% 102% Statistical discrepancy -196.555 -217.926 -4% -4% Source: ADB Key Economic Indicators DEMAND FOR GOODS • Z = C + I + G + X – M • Consumption • C = C(Yd) = c0 + c1*Yd • Disposable Income: Yd = Y – T • c1 = MPC = Marginal Propensity to Consume • MPC = 1 – MPS 13 Consumption, C Disposable Income, Yd Slope, c1 Consumption Function C = c0 + c1Yd c0 INVESTMENT • Models have two types of variables. Some variables depend on other variables in the model and are therefore explained within the model. Variables like these are called endogenous variables. • Other variables are not explained within the model but are instead taken as given. Variables like these are called exogenous variables. I = I(r) • We take investment as given to keep our model simple I = ത𝑰 14 Real interest rate, r Quantity of investment, I Investment function, I = I(r) GOVERNMENT SPENDING • Together with taxes T, G describes fiscal policy—the choice of taxes and spending by the government. • Just as we just did for investment, we will take G and T as exogenous. G = ഥ𝑮 15 NET EXPORT • Net export = exports – imports • NE = X – M NE = NE(𝜺) • Where 𝜀 is real exchange rate. • To simplify: 𝑁𝐸 = 𝑁𝐸 = 0 16 EQUILIBRIUM IN THE GOODS MARKET • The demand for goods is the sum of consumption, investment, government spending and net export: Z = c0 + c1(Y – T) + ҧ𝐼 + ҧ𝐺 • Equilibrium in the goods market requires that production Y be equal to the demand for goods Z: Y = Z Y = c0 + c1(Y – T) + ҧ𝐼 + ҧ𝐺 • In equilibrium, production, Y (the left side of the equation), is equal to demand (the right side).Demand in turn depends on income, Y, which is itself equal to production. 17 AUTONOMOUS SPENDING VS. MULTIPLIER • Y = c0 + c1Y – c1T + ҧ𝐼 + ҧ𝐺 (1 – c1)Y = c0 + ҧ𝐼+ ҧ𝐺 - c1T Y = 1 1−𝑐1 (c0 + ҧ𝐼+ ҧ𝐺 - c1T) • The term (c0 + ҧ𝐼+ ҧ𝐺 - c1T) is that part of the demand for goods that does not depend on output. For this reason, it is called autonomous spending. • The term 1 1−𝑐1 is called the multiplier 18 EQUILIBRIUM IN THE GOODS MARKET 19 Source: Blanchard 2017 Equilibrium output is determined by the condition that production is equal to demand. AN ALTERNATIVE WAY OF THINKING ABOUT GOODS-MARKET EQUILIBRIUM • Private Saving: SP = Yd – C = Y – T – C • Government Saving: Sg = T - G • Foreign Saving: Sf = M – X • Total saving: S = Sp + Sg + Sf • Investment = Saving: I = Sp + (T – G) + (M – X) To simplify: M – X = 0 I = Sp + (T – G) 20 To summarize: There are two equivalent ways of stating the condition for equilibrium in the goods market: Production = Demand Investment = Saving INVESTMENT EQUALS SAVING S = Y – T – C = Y – T – c0 – c1(Y – T) S = -c0 + (1 – c1)(Y – T) I = -c0 + (1 – c1)(Y – T) + (T – G) • Solving for output: • Y = 1 1−𝑐1 (c0 + ҧ𝐼 + ҧ𝐺 - c1T) Desired Investment, I(r) Investment, Saving, I, S Real interest rate, r Saving, S Equilibrium interest rate THE PARADOX OF SAVING • As people save more at their initial level of income, they decrease their consumption. But this decreased consumption decreases demand, which decreases production. • When income Y is lower, this decreases saving. Although people want to save more at a given level of income, their income decreases by an amount such that their saving is unchanged. • This means that as people attempt to save more, the result is both a decline in output and unchanged saving. This surprising pair of results is known as the paradox of saving (or the paradox of thrift). 22 APPENDIX • The Cobb-Douglas Function 𝐹 𝐾, 𝐿 = 𝐴𝐾𝛼𝐿1−𝛼 • Why this function has constant returns to scale? 𝐹 𝑧𝐾, 𝑧𝐿 = 𝐴(𝑧𝐾)𝛼(𝑧𝐿)1−𝛼 ⇒ 𝐹 𝑧𝐾, 𝑧𝐿 = 𝐴𝑧𝛼𝐾𝛼𝑧1−𝛼𝐿1−𝛼 ⇒ 𝐹 𝑧𝐾, 𝑧𝐿 = 𝐴𝑧𝛼𝑧1−𝛼𝐾𝛼𝐿1−𝛼 ⇒ 𝐹 𝑧𝐾, 𝑧𝐿 = 𝑧𝐴𝐾𝛼𝐿1−𝛼 = 𝑧𝐹 𝐾, 𝐿 = 𝑧𝑌 23