13宏观经济学英文版多恩布什课后习题答案全解.docx

13宏观经济学英文版多恩布什课后习题答案全解.docx

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13宏观经济学英文版多恩布什课后习题答案全解

Chapter13

SolutionstotheProblemsintheTextbook:

ConceptualProblems:

1.a.Accordingtothelife-cycletheoryofconsumption,peopletrytomaintainafairlystableconsumptionpathovertheirlifetime.Individualssaveduringtheirworkingyearssotheycankeepupthesameconsumptionstreamaftertheyretire.Thisimpliesthatwealthincreasessteadilyuntilretirementwhileconsumptionremainsstable.Weshouldthereforeexpecttheratioofconsumptiontoaccumulatedsaving（wealth）todecreaseovertimeuptoretirement.

1.b.Afterretirement,wealthisuseduptofinanceconsumptionduringtheremainingyears.Thereforetheratioofconsumptiontoaccumulatedsaving（wealth）increasesagainafterretirement,eventuallyapproaching1.

2.a.Supposethatyouandyourneighborbothworkthesamenumberofyearsuntilretirementandyoubothhavethesameannualincome.Ifyourneighborisinbadhealthanddoesnotexpecttoliveaslongasyoudo,shewillexpecttohavefewerretirementyearsinwhichtouseaccumulatedwealthtofinanceasteadyconsumptionstream.Yourneighbor'sgoalforretirementsavingwillnotbeashighasyours,andcomparedtoyou,shewillhaveahigherlevelofconsumptionoverherworkingyears.

Sinceplannedannualconsumption（C）isdeterminedbythenumberofworkingyears（WL）,thenumberofyearstolive（NL）,andincomefromlabor（YL）,wegettheequation:

C=[（WL）/（NL）]（YL）.

WLandYLarethesameforyouandyourneighbor,butNLissmallerforyourneighbor.Thereforeyouwillhavealowerlevelofconsumption（C）.

（Note:

Studentsmaycomeupwithavarietyofdifferentanswers.Forone,yourneighbor,whoisinbadhealth,currentlyhasmuchlargermedicalbillsthanyoudo.Thereforeshemaynotbeabletosaveasmuchforretirement,evenifshemightexpecttoliveaslongasyou.Ontheotherhand,shemaynothavelargemedicalbillsnow,butexpectsthemlater,asshegetsolder.Thismayinducehertosavemorenow.Whilesuchargumentsarevalid,instructorsshouldpointoutthattheanswershouldberelatedtothelife-cycletheory.）

2.b.IfweassumeforsimplicitythattherateofreturnonSocialSecurityisthesameastherateofreturnonprivatesaving,thentheintroductionofaSocialSecuritysystembasedonatrustfundshouldnothaveanyeffectonyourlevelofconsumption.SocialSecuritymaybeconsideredaformof"forcedsaving,"sinceyouareforcedtopaySocialSecuritytaxesduringyourworkingyearsandwill,inreturn,receivebenefitsduringyourretirementyears.However,mostlikelyyouwouldhavevoluntarilysavedasmuchasthegovernmentisnow“forcing”youtosavewithlevyingaSocialSecuritytax.Thereforeyourconsumptionbehaviorwillnotchange.Still,thelevyingofaSocialSecuritytaxreducesdisposableincomeduringyourworkingyears,increasingtheratioofconsumptiontodisposableincome（theaveragepropensitytoconsume）.Ifprivatesavingweresimplyreplacedwithgovernmentsaving,nationalsavingwouldnotbeaffected.

Inreality,however,theSocialSecuritysystemisnotstrictlyfinancedthroughatrustfund,butlargelyonapay-as-you-gobasis.ThesizeoftheSocialSecuritytrustfundwasfairlyinsignificantuntilthesystemwasamendedin1983.Nowthetrustfundisincreasingand,ineffect,contributingtothefederalbudgetsurplus.Butbecauseofouragingpopulation,predictionsarethattheSocialSecuritysystemwillexperienceseverefinancialdifficultieswithinthenext20-30years.Ifthecredibilityofthesystembecomesanissue,peoplemayintensifytheirsavingefforts,sincetheynolongerfeeltheycanrelyonthepublicsystemtoprovideforthemduringretirement.Inthepast,mostoftheSocialSecuritytaxeswerenot"saved"butimmediatelyusedbythegovernmenttofinancethebenefitsofthecurrentretirees.ThisiswhymosteconomistsclaimthattheSocialSecuritysystemhasledtoadecreaseinthenationalsavingsrateandadecreaseintherateofcapitalaccumulation.Themagnitudeofthisdecrease,however,hasnotbeenclearlyestablished.

3.a.IfyougetayearlyChristmasbonus,youimmediatelytreatitaspartofyourpermanentincomeandspenditaccordingly,thatis,DC=c（DY）.Inotherwords,yourcurrentconsumptionwillchangesignificantly.

3.b.IfyougetaChristmasbonusforonlythisyear,youwillconsideritastransitoryincome.Sinceyourpermanentincomeishardlyaffected,youwillconsumeonlyasmallfractionofitandsavetherest.Inotherwords,yourcurrentconsumptionwillnotbesignificantlyaffected.

4.Gamblers（orthieves）seldomhaveaverystableincome.However,theirconsumptionisdeterminedbytheirpermanentincome,thatis,theirexpectedaveragelifetimeincome.Whethertheyhavealargeorsmallincomeduringanygivenperiod,theirconsumptionpatternremainsrelativelystable,sincetheirpermanentincomeisnotsignificantlyaffectedbytemporarychangesinearnings.

5.Boththeories,intheirownway,trytoexplainwhytheshort-runmpcissmallerthanthelong-runmpc.Thelife-cycletheoryattributesthedifferencetothefactthatpeoplepreferasmoothconsumptionstreamovertheirlifetime.Thereforetheaverageexpectedlifetimeincomeisthetruedeterminantofcurrentconsumption.Thepermanentincometheorysuggeststhatthedifferenceisduetomeasurementerrors.Measuredincomehastwocomponents,thatis,permanentandtransitoryincome.Butonlypermanentincomeisatruedeterminantofcurrentconsumption.

6.a.Onepossibleexplanationcouldbethatthe“babyboomers”werestillintheirdissavingphase.Inotherwords,ifhouseholdsofthebabyboomgenerationstillhadtobuyhousesorpayforexpensesrelatedtochildcareintheirlatetwenties,theymaynothavebeenabletosaveforretirementyet.

6.b.Iftheaboveexplanationiscorrect,onecanexpectanincreaseinsavingasthese“babyboomers”age,becomemorefinanciallysolvent,andbegintoprepareforretirement.

7.Therankingfromhighesttolowestvalueshouldbefirst（a）,then（d）,andthen（b）.Clearly,（c）shouldbelowerthan（a）,butwhereexactlyitranksafterthatdependslargelyontheseverenessoftheliquidityconstraint.

8.Aseriesfollowsarandomwalkwhenfuturechangescannotbepredictedfrompastbehavior.Inotherwords,itdoesnothaveameanorclearlong-runvalue.Anymajorchangecomesaboutbecauseofrandomshocks.Hallassertedthatchangesincurrentconsumptionlargelycomefromunanticipatedchangesinincome.Accordingtothelife-cycletheoryorpermanent-incometheory,peopletrytosmoothenouttheirconsumptionstreaminsuchawaythatitsexpectedvalueisalwaysthesameineachperiod.Therefore,wecanexpressfutureconsumptionastheexpectedvalueplussomeerrorterm,thatis,somerandomvaluethatisunpredictable.Thiserrortermisashocktofutureincomethatisspreadovertheremaininglifetime.Hallsupportedthepermanent-incomehypothesisbyshowingthatlaggedconsumptionisthemostsignificantdeterminantoffutureconsumption.

9.Theproblemofexcesssensitivitymeansthatconsumptionrespondsmorestronglytopredictablechangesincurrentincomethanthelife-cycletheoryandpermanent-incometheoriespredict.Theproblemofexcesssmoothnessmeansthatconsumptiondoesnotrespondasstronglytounpredictablechangesincurrentincomeasthesetheoriespredict.However,theexistenceoftheseproblemsdoesnotinvalidatethetheories.Itsimplymeansthatthetheoriescanexplainconsumptionbehavioronlytoacertaindegree.

10.Precautionary（orbufferstock）savingcanbeexplainedbyuncertainty.Itcouldbeuncertaintyinregardtoone’slifeexpectancyorone’stimeofretirement（affectingtheaccumulatedsavingneededtofinanceretirement）,oruncertaintyaboutfuturespendingneeds（whichmaybecausedbyachangeinfamilycompositionorhealth）.Clearly,ifweaccountforsuchuncertainties,webringthemodelmuchclosertoreality.Forexample,manyelderlystillcontinuetosaveafterretirementinanticipationofpredictedhighmedicalcostsnotcoveredbyMedicare.

11.a.Itisunclearwhetheranincreaseintheinterestrateleadstoanincreaseoradecreaseinsaving.Ontheonehand,astheinterestrateincreases,thereturnonsavingincreasesandpeoplemaythereforeincreasetheirsavingseffort（duetothesubstitutioneffect）.Ontheotherhand,ahigherreturnonsavingimpliesthatagivenfuturesavingsgoalcannowbereachedwithasmallersavingseffortineachyear（duetotheincomeeffect）.

11.b.Theincomeeffectandthesubstitutioneffectgenerallytendtogoindifferentdirections,andtheoveralloutcomedependsontherelativemagnitudeofthesetwoeffects.Untilnow,empiricalevidencehasnotestablishedasignificantsensitivityofsavingtochangesintheinterestrate.Thiswouldimplythattheincomeandthesubstitutioneffectshaveaboutthesamemagnitude.

12.a.AccordingtotheBarro-Ricardohypothesis,itdoesnotmatterwhetheranincreaseingovernmentspendingisfinancedbytaxationorbyissuingdebt.

12.b.TheBarro-Ricardohypothesisstatesthatpeoplerealizethatgovernmentdebtfinancingbyissuingbondssimplypostponestaxation.Inotherwords,peopleknowthatthegovernmentwillhavetoraisetaxesinthefuturetopaybackwhattheyhaveborrowednow.Therefore,expansionaryfiscalpolicythatresultsinanincreaseinthebudgetdeficitwillnostimulatetheeconomysinceitwillleadtoanincreaseinsavingratherthanconsumption.Peoplewanttobepreparedtopayfuturetaxes.

12.c.TherearetwomainobjectionstotheBarro-Ricardohypothesis.Oneisbasedonliquidityconstraints,thatis,peoplemaywantt