The subject of macroeconomic theory
Definition 1
Macroeconomics is a section economics, which studies the general behavior of the economy from the standpoint of maintaining a stable economic growth, resource efficiency and lower inflation.
Definition 2
The subject of macroeconomic theory: the study of such phenomena of macroeconomics that do not belong to any one economic sector, but are associated with all sectors and require a general (macroeconomic) explanation.
The behavior of the economy in macroeconomics is considered as a whole: its ups and downs, inflationary problems, and unemployment are analyzed. Note that some macroeconomic issues may relate to the economy of a particular country, while others may affect the economies of a number of countries (for example, the global oil or financial crisis). In this case, it refers to global macroeconomic analysis.
Macroeconomic theory considers not only fluctuations in employment and output in the long term, but also their short-term changes that form the business cycle.
At the macroeconomic level, the following groups of main problems are studied:
Remark 1
Despite the accepted division of micro- and macroeconomic issues, it should be borne in mind that these components do not exist on their own, but are closely interconnected with each other.
A significant gap between these two sciences appeared at the stage of the emergence of macroeconomics, today it is gradually shrinking. Most modern macroeconomic concepts are characterized by a microeconomic rationale, that is, they are based on certain behavioral microeconomic models, the results of which are then aggregated and examined at the macro level. The key problematic aspect so far can be called the actively developing theory of aggregation.
The need for aggregation exists not only in theory; in practice, it is also necessary to collect and process statistical data that form the basis for empirical analysis. Macroeconomics considers aggregate variables such as consumption, aggregate output, investment, imports and exports, price levels, etc. Macroeconomics also considers aggregate markets for goods, labor, and assets.
The specifics of the macroeconomic approach to the study economic processes is expressed as follows:
object research macroeconomics is the national economy as a whole. In reality, the national economy is always based on a certain type of industrial relations between multiple economic entities. This or that type of production relations is based on this or that form of ownership (private, collective, state). Relations between subjects, connections between them are always ordered, organized, coordinated in one way or another. To date, two methods of coordinating relations, ties are known: market and centralized ( state regulation).
A specially ordered system of relations between economic entities is an economic system. In this way, object of macroeconomics speaks economic system, of course, at the macro level, at the level of everything national economy.
In the economic literature, there are different approaches to the classification of economic systems.
The most effective today is a mixed economic system. It combines various forms of ownership (private, collective, state) and two regulatory mechanisms economic activity(market and state). Exactly mixed economic system and is today object study macroeconomics.
Different forms of ownership and two mechanisms of regulation in a mixed economic system can be combined in different ways. In this regard, distinguish three main variants of the mixed economy model:
- conservative the option provides for limited state intervention in macroeconomic processes in order to create favorable conditions for the development of private property, market levers for self-regulation of the economy;
- liberal option involves the implementation of important institutional and social reforms, the achievement of rational interaction between the private and public sectors economy, the introduction of a system of national planning, the subordination of the private sector to the interests of the development of society, the implementation of the gradual socialization of the capitalist economy;
- social reformist the mixed economy option takes into account the need for an optimal combination of decentralism and centralism, planning and the market, individual and collective forms of ownership in order to gradually transform capitalism into a more progressive society.
The subject of macroeconomic science considered to be economic relations between subjects in the process of production, distribution, redistribution and consumption of goods and services at the level of the national economy. It seems that subject of macroeconomics we can also consider the mechanism of functioning of the national economy, the economic system at the macro level.
Functions of macroeconomics:
- cognitive– study of economic phenomena, processes, cause-and-effect relationships in the economy. Such a study is based on facts obtained as a result of observation, collection and processing of information. Then economic principles– generalizations about real phenomena and processes. Since the derivation of principles from facts is economic analysis, this function of macroeconomics has been called macroeconomic analysis;
- applied. The analysis reveals the shortcomings and problems of the economic system, therefore, macroeconomics can and does give recommendations for improving it (the system) and solving existing macroeconomic problems. This function is called macroeconomic regulation.
Macroeconomic regulation is carried out through the implementation of economic policy.
Macro economic policy - a system of state measures aimed at solving the main macroeconomic problems, achieving macroeconomic goals. These are:
Increase in national production, economic growth;
Price stability, overcoming inflation;
Full employment, incl. reducing unemployment;
Ensuring an active trade and payment balance.
The achievement of these goals is carried out with the help of certain instruments of fiscal and monetary policy. There are also social policy, employment policy, foreign exchange, foreign trade, etc. politics.
Methods of macroeconomic analysis. Macroeconomic models and quantities
Macroeconomics is based on the principles of materialistic dialectics as a general method of cognition economic life society. And also owns a specific method - macroeconomic modeling.
A macromodel is a formalized (logically, graphically, algebraically) description of various economic phenomena and processes in order to identify the relationships and interdependencies between them.
Create macro model means to find a function that relates endogenous and exogenous variables.
exogenous(external) variables - their value is determined outside the model, these are the initial data.
Endogenous(internal) - the probabilistic values of which are determined in the process of solving the model.
Macroeconomics also uses aggregated values(indicators). They reflect the totality of specific economic units as if they were a single entity.
According to the same principle - the principle of aggregation - macroeconomic entities are also defined.
The subjects of macroanalysis are:
ü household sector- all private farms of the country, whose activities are aimed at meeting their own needs;
ü business sector- the totality of all firms, enterprises and organizations registered within the country;
ü government sector– all state institutions and organizations;
ü sector "abroad"- the entire set of economic entities that are outside the country, as well as foreign state institutions.
Circular flow model
Macroeconomic analysis is based on circular flow model(model of GNP circulation, model of circulation of income and expenses).
In an open economy (interacting with the outside world) with government intervention the circular flow model takes the following form (see Fig. 1.1).
Key takeaway from the model: real and cash flows are carried out freely, provided that the total expenditure of households, firms, the state and the rest of the world is equal to the total volume of production. Aggregate spending gives impetus to the growth of employment, output and income; from these incomes, the expenses of economic entities are again financed, which again return in the form of income to the owners of production factors, etc. If aggregate spending, which determines aggregate demand, falls, then aggregate employment and output fall, which reduces aggregate income, which in turn determines aggregate demand. Therefore, an important task of macroeconomic policy is to stabilize aggregate demand.
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The subject and tasks of macroeconomics.
Macroeconomics studies the behavior of the economy as a whole at the national economic level, in contrast to microeconomics, which studies production, prices, demand and supply at the level of an individual firm or a separate local market
Macroeconomics- a branch of economic science that studies the behavior of the economy as a whole in terms of ensuring conditions for sustainable economic growth, minimizing inflation and balance of payments.
The subject of macroeconomics the mechanism of functioning of everything National economy regardless of the specifics of its individual industries, the factors that determine its changes in the short and long term and the ways in which the state influences the national economic processes.
The Goal of Positive Macroeconomics- clarification of the essence of economic phenomena occurring in society and the development of recommendations for the implementation of economic policy.
Regulatory macroeconomics– highlights the fundamental ideological principles and postulates of the economic behavior of a macroeconomic entity.
The main functions of macroeconomics:
1) epistemological
2) practical
3) predictive
4) educational
Economic policy- set economic ideas, goals and objectives, as well as economic actions of the state in order to create and improve conditions economic development.
Macroeconomic policy instruments:
Fiscal (fiscal) policy
Credit and monetary (monetary) policy
The object of macroeconomic analysis Is the economic system as a whole and its aggregated parameters.
As a science that studies the behavior of the economy as a whole and the role of the state in this, macroeconomics is closely related to such sciences as economic theory, national economics, and state science. It underlies a number of economic and social disciplines, such as state regulation of the economy, fiscal and monetary management. To confirm the correctness of its conclusions, macroeconomics relies on such disciplines as cybernetics, general and economic statistics, cliometry.
Macroeconomics is closely related to microeconomics. However, unlike the latter, it analyzes more significant relationships in social production, abstracting from the specifics of behavior individual markets. If microeconomics provides answers to more specific questions (related, for example, to the dynamics of the agricultural product market or the medical services market), then macroeconomics, abstracting from these features, seeks to explain the underlying causes that cause changes in the behavior of the state as a whole, its economic growth rates, ups and downs in the economy, the impact of inflation on production and employment, the impact of international factors on the domestic economic balance, etc.
At the same time, macro- and microeconomics do not oppose each other, but complement one another. So, microeconomics, studying the behavior of prices in a particular industry, quite justifiably assumes that prices in individual industries are data values, and on this basis it studies individual differences in price dynamics.
Unit- a set of specific economic units that are treated as if they constituted one unit.
economic system- is a certain way ordered system of communication between producers and consumers of goods and services.
The main elements of the economic system:
1) Socio-economic relations based on the form of ownership economic resources and results economic activity.
2) Organizational forms of economic activity (cooperation, specialization, integration).
3) economic mechanism as a way to regulate economic activity.
4) Specific economic ties between business entities.
The subjects of macroeconomics are:
1. Household sector (all private households in the country, acting to meet the needs) they:
Provide factors of production
consume part of the income
save
2. entrepreneurial (all firms working for profit) they:
Demand for factors of production
Offer results of activities
Invest
3. public sector
Creates public goods
Collects taxes
Carries out public procurement of goods and services
Provides money supply
4. "abroad" (all objects and subjects abroad)
Influences the economy through exports and imports
Methods of macroeconomic analysis.
Methods of macroeconomics:
Induction (the movement of thought from the concrete to the abstract)
Deduction
Scientific abstraction - a method of studying real economic processes and abstracting from everything insignificant and random
Economic and mathematical modeling (basic and specific method)
Macroeconomic model- a mathematical equation in which real economic processes are expressed in an abstract and simplified form.
Types of macroeconomic models:
1) By way of presentation:
brain teaser
Graphic
Economic and mathematical
2) By duration:
Short term
Long term
3) By the number of subjects used in the analysis:
Simple
4) By the degree of coverage by the sector "Abroad":
Closed
open
5) By the nature of the reflection of the time factor:
Static (steady)
Dynamic (change over time)
Exogenous variables are introduced from outside and are set before the start of the model.
Endogenous - are formed within the model based on conclusions about the properties of the displayed quantities.
Specific to macroeconomics is the presence of flow and stock variables. Stock variables change only in a specific period of time and characterize the state of an object on a specific date.
Flow variables characterize an economic process that occurs continuously and are measured in units over a certain period of time.
Functional dependencies between endogenous variables have the following classification:
1) behavioral functions express the typical advantages that have developed in society.
Dependence of consumption on income
2) technological functions characterize technological and organizational-technological dependencies
3) institutional functions reflect institutional dependencies
T = T (y) * Y - tax amount.
4) differential functions express dependencies based on the definition of economic phenomena.
GNP by expenditure = C + Ival. + G + Xn
Macroeconomic analysis has 2 levels:
Ex post (national accounting) is based on the determination of macroeconomic parameters of the past period in order to obtain information on how the national economy has formed and what results it has achieved.
On the basis of such an analysis, the macroeconomic concept is corrected.
Ex ante - predictive modeling of economic phenomena and processes in order to determine which factors and how will affect the value of indicators in the future.
macroeconomic agents.
Households (households) - a cumulative, rationally acting macroeconomic agent, the purpose of economic activity is to maximize utility. Households are
Owners of economic resources (labor, land, capital and entrepreneurial ability).
By selling economic resources, households receive income, most of which they spend on consumption (consumer spending), and save the rest, and therefore act:
Major buyers of goods and services;
The main savers and therefore lenders, providing the supply of credit funds (loanable funds) in the economy.
Firms (business firms) is a cumulative, rationally acting macroeconomic agent, the purpose of economic activity is profit maximization. Firms are:
The main producers of goods and services in the economy;
Buyers of economic resources with which the production process is carried out.
Firms need investment goods (primarily equipment) to expand production, generate capital gains, and offset capital depreciation, so they are
Buyers of investment goods
e. show demand for a part of the output produced in the economy.
Since sales proceeds are paid to households in the form of factor income, then, as a rule, firms use borrowed funds to finance their investment expenditures, acting as
The main borrowers (borrowers) in the economy, presenting a demand for credit funds.
Households and firms form the private sector of the economy.
The state (government) is a rationally acting macroeconomic agent, represented by the aggregate public institutions and organizations that have the political and legal right to influence the course of economic processes and regulate the economy. The main task of the state in a market economy is to eliminate market failures and maximize social welfare.
The state is:
Producer of public goods;
The buyer of goods and services, which is necessary to ensure the functioning of the public sector;
Redistributor of national income (through the system of taxes and transfers);
Depending on the state state budget- a lender or borrower in the financial market;
Regulator and organizer of functioning market economy, firstly, by creating and providing the institutional framework for the effective development of the economy ( the legislative framework, safety system, tax system and etc.
), i.e. develops the "rules of the game"
secondly, by doing macroeconomic policy, which is divided into structural, aimed at ensuring economic growth, and opportunistic (stabilization), aimed at smoothing cyclical fluctuations in the economy (ensuring full employment of resources and a stable price level). Main types macroeconomic policies are:
fiscal (or fiscal) policy, monetary (or monetary) policy, foreign trade policy,
income policy (policy " wage- prices").
The private and public sectors form a closed economy.
The foreign sector is the total rational macroeconomic agent, uniting all other countries of the world with which this country interacts through:
international trade, i.e. purchases and sales of goods and services (export and import of goods and services);
capital movements, i.e. buying and selling financial assets - valuable papers(export and import of capital).
Adding the foreign sector to the analysis results in an open economy.
macroeconomic markets.
Aggregation of markets is carried out in order to identify the patterns of functioning of each of them, namely:
study of the features of the formation of supply and demand and the conditions for their equilibrium in each of the markets;
determining the equilibrium price and equilibrium volume based on the ratio of supply and demand;
analysis of the consequences of a change in equilibrium in each of the markets.
Market aggregation makes it possible to identify four macroeconomic market:
Market of goods and services;
Financial market (market of financial assets);
Market of economic resources;
Currency market.
The aggregated market for goods and services (goods market) involves abstracting (distracting) from the whole variety of goods produced by the economy and highlighting the most important patterns in the functioning of this market, i.e. formation of demand and supply of goods and services. Demand for goods and services is presented by all macroeconomic agents, and firms provide goods and services. The ratio of supply and demand makes it possible to obtain the value of the equilibrium level of prices for goods and services (price level - P) and the equilibrium volume of their production (real output - G). The market for goods and services is also called the real market (real market), because it sells and buys real assets (real values).
The financial market (financial assets market) is a market in which demand is presented and supply of financial assets is ensured. It includes:
money market(money market) - the market of monetary financial assets; securities market (bonds market) - the market for non-monetary financial assets.
There are no processes of buying and selling in the money market (buying money for money is meaningless), but the study of the laws governing the functioning of the money market, the formation of demand for money and the supply of money is very important for macroeconomic analysis.
Demand for money is presented by all internal macroeconomic agents (households, firms and the state), and the money supply is provided by the central bank, which has the monopoly right to issue money into circulation. The study of the money market, the conditions of its equilibrium allows us to obtain the equilibrium interest rate (interest rate - R), acting as the price of money (the price of credit), and the equilibrium value money supply(money stock - M), as well as consider the consequences of a change in the equilibrium in the money market and its impact on the market for goods and services. The main intermediaries in the money market are banks that accept cash deposits and issue loans.
Stocks and bonds are bought and sold on the stock market. A share is a perpetual security (that is, it does not have a maturity and exists for as many years as the company that issued it exists), making its buyer a co-owner of this company and providing him with the right to participate in its management and the right to receive income - a dividend, the value which depends on the size of the firm's profit. A bond is a term security (i.e., issued for a certain period of time - for example, for a year, for 5 years, etc.), the buyer of which is a creditor. The bond does not give its owner the right to manage the company, however, it provides a fixed (regardless of the amount of profit) income - interest, and at maturity - the return of the nominal value of the bond. The buyers of securities are primarily households that spend their savings to generate income (dividend on stocks and interest on bonds). Sellers (issuers) of shares are firms, and bonds - firms and the state. Firms issue stocks and bonds to raise funds to finance their investment spending and expand output, while the government issues bonds to finance government deficits.
Market of economic resources (resource market) in macroeconomic models is represented by the labor market1, since the patterns of its functioning (the formation of labor demand and labor supply) make it possible to explain macroeconomic processes, especially in the short term. When studying the labor market, it is necessary to abstract (abstract) from all differences in types of work, in skill levels and vocational training. The demand for labor is provided by firms, while the supply of labor is provided by households. The equilibrium of the labor market allows us to determine the equilibrium amount of labor in the economy (labour - L) and the equilibrium price of labor - the wage rate (real wage - W/P). An analysis of disequilibrium in the labor market makes it possible to identify the causes and forms of unemployment.
1 V macroeconomic models, especially those studying the behavior of the economy in the short run, the capital stock is assumed to be fixed, so the capital market is not studied. In models that study the behavior of the economy in long term, the change in the capital stock occurs under the influence of changes in the investment costs of firms.
A foreign exchange market is a market where national currencies are exchanged for each other. monetary units(currencies) different countries(dollars to yen, pounds sterling to euros, etc.). The demand for the national currency is presented by foreigners who want to buy goods and (or) securities of this country, and the supply national currency provided by the country's central bank. As a result of the exchange of one national currency for another (the ratio of supply and demand), its price is formed - exchange rate(e - exchange rate).
5. Two-sector and three-sector model of circulation (closed economy).
1. Two-sector model of macroeconomic circulation
First, consider a two-sector model of the economy, consisting of only two macroeconomic agents - households and firms - and two markets - the market for goods and services and the market for economic resources (Figure 1.1).
Rice. 1.1 Diagram of the circulation of flows in the economy
Households buy (demand) goods and services that firms produce (provide supply) and supply goods and services to the market. In order to produce goods and services, firms purchase (demand) economic resources - labor, land, capital and entrepreneurial ability - (i.e. demand economic resources) owned by households (provide the supply of economic resources). Material flows must be mediated by cash flows. When buying goods and services, households pay for them. Household spending on goods and services is called consumer spending. Firms, selling their products to households, receive sales proceeds, from which they pay households a fee for economic resources, which for firms is a cost, and for households - factor incomes - wages (for the labor factor), rent (for the land factor), interest (for the capital factor) and profit (for the entrepreneurial ability factor), the sum of which is the national income. The household income received is spent on the purchase of goods and services (consumer spending). Income and expenses move in a circle.
The income of each economic agent is spent, creating income for another economic agent, which, in turn, serves as the basis for his expenses. An increase in spending leads to an increase in income, and an increase in income is a precondition for further increases in expenses. That is why the scheme is called the circuit model or circular flow model. Material flows move counterclockwise, and money flows clockwise. Demand moves clockwise and supply moves counterclockwise.
It follows from the scheme that: the cost of each material flow is equal to the value of the cash flow; national product equals national income; aggregate demand equals aggregate supply; total income equals total expenses.
Fig.1.2. Diagram of the circulation of flows in the economy
When analyzing the complete circuit diagram (Fig. 1.2), we will only investigate cash flows.
Since households act rationally, they do not spend all their income on consumption. They save part of their income, and savings must bring income. Firms also feel the need for additional funds to ensure and expand production (in credit funds). This predetermines the need for the emergence of a financial market in which household savings are converted into investment resources firms. This happens in two ways:
Or households provide their savings to financial intermediaries (primarily banks) from which firms take loans;
Or households spend their savings on the purchase of securities issued by firms, directly providing them with investment resources.
In the first case, the connection between households and firms is established indirectly - through the money market, in the second - directly - through the securities market. The company's funds received in the financial market are spent on the purchase of investment goods, primarily equipment. Consumer spending by households is supplemented by investment spending by firms. At the same time, the equality of national income to the national product is preserved, therefore, in macroeconomics, national income and national product are denoted by the same letter - Y. At the same time, the value of the national product in the equilibrium state is equal to the sum of total expenditures:
The total expenditure (national product) in the two-sector model of the economy consists of consumer spending by households (C) and investment spending by firms (I):
and national income from consumption (C) and savings (S):
Hence it follows that
C + I = C + S,
which means that total expenses are equal to total income, and
those. investment equals savings. Investments are injections into the economy, and savings are withdrawals from the economy. Injections are defined as anything that increases the flow of spending and therefore income (with the exception of consumer spending, which is neither injection nor withdrawal). Withdrawals are anything that reduces the flow of spending and therefore income. The growth of investment increases total costs (aggregate demand), provides additional income producers, serves as an incentive to increase the national product (output). An increase in savings reduces total spending and may lead to a reduction in production. In an equilibrium economy, injections equal withdrawals.
2. Three-sector model of macroeconomic circulation
The emergence of the state leads to the emergence of new types of macroeconomic relationships and the transformation of a two-sector model of the economy into a three-sector one.
Firstly, the state makes purchases of goods and services, which is associated with the need to maintain the public sector of the economy, ensure the production of public goods, perform the functions of regulating the economy and managing the country. At the same time, the wages of civil servants are considered not as a payment for an economic resource in the resource market, but as a payment for a service in the goods and services market, since this payment is made from the state budget and is the result of income redistribution. Government purchases of goods and services increase the aggregate demand for the national product, i.e. total expenses.
Secondly, the state obliges everyone to pay taxes, which are the main source of state budget revenues. However, acting as a redistributor of national income, the state not only collects taxes, but also pays transfers. Transfers are payments that households and firms receive free of charge (not in exchange for goods and services) from the state. State transfer payments to households are various kinds of social payments, such as pensions, scholarships, unemployment benefits, disability benefits, poverty benefits, etc. State transfer payments to firms are called subsidies.
Third, depending on the state of the state budget, the state can act either as a creditor or a borrower in the financial market. If government spending (government purchases + transfers) exceeds government revenues (taxes), which corresponds to the state of the state budget deficit, then the state must borrow money in the financial market to pay its expenses, acting as a borrower. To do this, the state issues government bonds (does internal loan) and sells them on the securities market to households. Households spend part of their savings on government bonds, enabling the government to pay for part of its expenses that exceed the revenues of the treasury, i.e. financing the government budget deficit. At the same time, the government pays households interest on its bonds, making them attractive for purchase. Interest payments on government bonds increase household income, but are government budget expenditures and are called “public debt servicing costs”. If state revenues exceed expenditures (there is a surplus (surplus) of the state budget), then the state can act as a creditor in the financial market, buying securities of private firms.
For the three-sector model of the economy, all the conclusions made for the two-sector model are valid, i.e. national product equals national income, total expenditure equals total income, injections equal withdrawals. However, total spending now consists of three components: consumption (C), investment (I) and government purchases (G):
a total income allocated to consumption (C), savings (S) and taxes (T):
Here, taxes mean net taxes representing the difference between taxes (Tx) and transfers (Tr):
As a rule, when analyzing the circuit model of interest payments on public debt are not specially allocated and are taken into account in the amount of transfers, since, like transfers, they are not paid in exchange for a product or service.
Government purchases of goods and services are injections, and (net) taxes are withdrawals from the flow of expenditure and income, so the formula for equality of injections and withdrawals becomes:
Transfers and interest payments on government bonds are injections because they increase the flow of income and hence expenditure.
An analysis of the three-sector model of the economy (closed economy model) shows that the national income, which is the sum of factor incomes, i.e. income earned by the owners of economic resources (households) differs from the income that households can dispose of and spend at their own discretion, i.e. from disposable income. In accordance with the circuit diagram, disposable income differs from national income by the amount of taxes that households pay to the state and the amount of transfers that the state pays to households, therefore, to obtain the amount of disposable income, it is necessary to subtract taxes (Tx) from national income and add transfers ( Tr) (as well as interest payments on government bonds, if any), i.e. deduct net taxes:
T = Tx - Tr
AT general view can be written:
Yd = Y - Tx + Tr or Yd = Y - T
Household disposable income is used for consumption (consumer spending) and savings:
6. Four-sector model of circulation (open economy).
The inclusion of the foreign sector in the circuit of circulation gives a four-sector model of the economy (model of an open economy) and means the need to take into account the relationship of the national economy with the economies of other countries, which, first of all, are manifested through international trade goods and services - through the export and import of goods and services. Since only cash flows are reflected in the circuit diagram, exports (Ex) are understood to be the proceeds (income) from exports (arrow from the foreign sector), and imports (Im) are the costs of imports (arrow to the foreign sector).
The ratio of exports and imports is reflected in the trade balance. If import costs exceed export earnings (Im > Ex), then this corresponds to a state of trade deficit. Financing of the trade deficit (the difference between import costs and export earnings) can be carried out:
a) at the expense of foreign (external) loans from other countries or from international financial institutions, such as the International Monetary Fund, the World Bank, etc. (note that an external loan can also be used to finance the state budget deficit)
b) by selling financial assets (private and government securities) to foreigners and entering the country Money towards their payment.
In both cases, to the country (on financial market) there is an inflow of funds from the foreign sector, which is called capital inflow. This allows you to finance the trade deficit. If the income from exports exceeds the costs of imports (Ex > Im), which means a surplus (surplus) of the trade balance, then there is an outflow of capital from the country, since in this case foreigners sell their financial assets and receive the necessary funds to pay for exports.
In the four-sector model (the open economy model), the principle of equality of income and expenditure is also preserved. Including foreign sector spending, which is called “net exports” (Xn) and is the difference between exports and imports:
Xn \u003d Ex - Im,
it is possible to write down the formula for total expenditures, which are equal to the sum of expenditures of all macroeconomic agents: households, firms, the state and the foreign sector:
E = C + I + G + Xn.
Total income formula:
This means that the income is used for consumption, savings and paying taxes. Since in the state of equilibrium E \u003d Y, it follows that:
C + I + G + Xn = C + S + T.
This equality is called the macroeconomic identity. At the same time, the value of total expenditures is equal to the value of the total (gross) domestic product (GDP):
Y \u003d E \u003d C + I + G + Xn
In order to derive the formula for equality of injections and withdrawals from the macroeconomic identity, it should be borne in mind that the net exports indicator also contains an injection (i.e., exports, which are the costs (demand) of the foreign sector for the products of this country, and, therefore, part of the total costs , which increases the flow of expenditures and revenues) and withdrawal (i.e., imports that "leak" part of the country's total income to the foreign sector and, therefore, reduce domestic spending and, accordingly, income), so the formula for equality of injections and withdrawals should be written as:
I + G + Ex = S + T + Im
The circuit diagram shows all kinds of interconnections and interdependencies in the economy.
Gross domestic product.
GROSS DOMESTIC PRODUCT (GDP) - the volume of products and services for market value, created for a certain period as a result of production activities economic units that are residents of the country. Residents are understood as economic units (enterprises and households) with the center of economic activity on economic territory of this country. GDP is defined as the value of final goods and services produced in a country, i.e. goods and services used for final consumption. The value of intermediate goods and services purchased and used in production is not included in GDP. Since final products are mainly consumed by the population, and accumulation ensures economic development, GDP is used as an indicator characterizing the level of well-being. In addition, GDP can also be defined as gross value added. Value added characterizes the contribution to the value of products made by enterprises. The added value calculated for a separate enterprise characterizes its contribution to the production of a product or service in conditions where their creation, due to the division of labor, is the result of the cooperative activities of many enterprises. GDP is created using fixed capital, which wears out and becomes morally obsolete in the production process. The share of consumed fixed capital accounts for approximately 10% of GDP. Theoretically, depreciation should be excluded, since it does not represent added value, but characterizes the cost of capital consumed in production. However, the definition of depreciation is associated with difficult to overcome problems in calculating the replacement cost of fixed assets. Therefore, the cost of consumed fixed capital is usually included in the volume of GDP. This makes it more comparable when comparing data for individual countries. Gross domestic product is the main indicator on the basis of which the level and pace of a country's economic development are determined. The increase in GDP is accompanied by an increase in the number of employees and an increase in the standard of living, which is expressed in the growth of consumption of goods and services. The increase in GDP is determined by investments, their share in GDP and the excess of total investment over the amount of capital consumed in the production process. Periods of economic growth can be replaced by a decline in production, employment, a decrease in GDP per capita and, accordingly, in living standards. However, if we consider development over long periods, it is obvious that the rise in the living standards of the population is based on the growth in the production of goods and services (GDP) in general and per capita. The leading factors GDP growth are the involvement in production of additional resources (primarily additional physical capital and labor), as well as an increase in the productivity of production factors due to scientific and technological progress, the use of more productive technologies and the improvement of the skills of workers.
Methods for measuring GDP.
Three methods can be used to calculate GDP:
1. by expenses (end-use method);
2. by income (distributive method);
3. value added (production method).
The use of these methods gives the same result, since in the economy the total income is equal to the value of the total expenditure, and the value added is equal to the value of the final product, while the value of the final product is nothing more than the sum of the costs of end consumers for the purchase of the total product.
GDP "BY EXPENDITURE"
GDP calculated by expenditures is the sum of expenditures of all macroeconomic agents, since in this case it is taken into account who acted as the final consumer of goods and services produced in the economy, who spent money on their purchase. When calculating GDP by expenditure, the following are summarized:
household spending (consumer spending - C) + firm spending (investment spending - I) + government spending (government procurement of goods and services - G) + foreign sector spending (net export spending), denoted by Xn (net export)
SECTION III. MACROECONOMICS
Topic 1. Introduction to macroeconomics
Despite the fact that macroeconomics is a section of economic theory, the subject, object and methodology of its research have certain specifics. When studying this topic, it is necessary to identify the features of the subject and object of macroeconomics research, as well as specific research methods.
Subject of macroeconomics
Macroeconomics as an independent scientific discipline arose later than microeconomics. The division of economic theory into micro- and macroeconomics occurred in the 30s. XX century, under the decisive influence of the ideas of John Maynard Keynes, who developed a scientific concept that explains the occurrence of market fluctuations in the economy, and also proposed a special government action program to overcome depression and smooth out business cycle. The main theoretical ideas of John. M. Keynes were outlined in the work "The General Theory of Employment, Interest and Money" (1936).
Although, this does not mean that until the beginning of the 30s. 20th century this area economic knowledge was absent. Macroeconomic concepts are present among the mercantilists, and among the physiocrats, and among the representatives of classical political economy. All of them had quite definite views on such macroeconomic problems as the necessary volume of national production, the level of employment, inflation, economic functions states, etc. Therefore, macroeconomics is not, generally speaking, the discovery of J. M. Keynes. However, the economists of the past, being people of their era, did not formally create macroeconomic models in the modern sense of the term.
Until the beginning of the 70s. practically all macroeconomics was reduced to a specific interpretation of the ideas of J. M. Keynes in the form of a macroeconomic model, the creation of which is attributed to J. Hicks. This model has been widely used in scientific research, teaching economic theory, and shaping economic policy. In the development and popularization of this model, huge contribution P. Samuelson and A. Hansen.
However, in the early 1970s, the unanimity that prevailed among economists was broken. Separate doubts about the correctness of some postulates of classical Keynesianism grew into a "monetarist counter-revolution" led by the recognized leader of this scientific school, Milton Friedman. Other emerging areas of economic thought also criticized the macroeconomic model of J. Hicks and proposed alternative interpretations of the ideas of J. M. Keynes.
The rapid development of macroeconomic analysis was reflected in the evolution of previously established ideas about the subject of this branch of economic knowledge. As a result, the clear former boundaries between the object of study of micro- and macroeconomics have become blurred and fuzzy. Many problems that were considered purely macroeconomic 20 years ago have ceased to be such (for example, employment).
The subject of macroeconomics research is constantly changing, in the course of the reproduction process, new macroeconomic aspects arise, the understanding of which requires new approaches and solutions. The impact of scientific and technical progress, external economic factors and much more determine structural continuous shifts in national economy that appear in the markets. As a result, the economic behavior of the state, business and the public begins to deviate from that which was provided for by the already developed macroeconomic models. There is a need to develop new models that take into account the changes that have occurred. It is fundamentally impossible to develop a model suitable for different national economies at all times. Therefore, the development of macroeconomics cannot be suspended, just as the reproduction process cannot be suspended.
In general, two circumstances underlie the division of economic theory into micro- and macroeconomics.
First, microeconomics and macroeconomics differ in the aspect and methodology of studying the national economy. Microeconomic analysis is devoted to studying the behavior of individual economic entities, identifying the conditions that ensure the compatibility of their economic plans, and describing the mechanism for coordinating the totality of individual goals of subjects of the national economy.
Macroeconomic analysis is aimed at identifying the results of the functioning of the national economy as a whole. In macroeconomics, the factors that determine national income, the unemployment rate, the rate of inflation, the state of the state budget and the country's balance of payments, and the rate of economic growth are studied.
Secondly, microeconomics studies the exchange economy in which "commodity money" is used, i.e. the functions of money are performed by one of the goods produced by firms (for example, gold). This leads to the fact that in microeconomics only the real sector of the national economy is considered. Macroeconomic analysis proceeds from the existence in the country of " credit money”, the number of which is regulated by the state ( central bank). Therefore, in macroeconomics, along with the real one, the monetary sector of the economy and the interaction between these sectors of the economy are studied.
Thus, in the most general form the subject of macroeconomics is the behavior of the economy, considered as a whole in terms of ensuring conditions for sustainable economic growth, full employment of resources and minimization of inflation.
To understand the subject of study of macroeconomics, it is important to distinguish between ex post macroeconomic analysis, or economic (national) accounting, and ex ante analysis - macroeconomics in the proper sense of the word.
Within the framework of national accounting, the values of macroeconomic parameters of the past period are determined in order to obtain information on how the economy has functioned and what results have been achieved. This information serves to determine the degree of implementation of the planned goals, the development of economic policy, and a comparative analysis of the economic potentials of various countries. Based on ex post analysis data, macroeconomic concepts are being adjusted and new ones are being developed.
Ex ante analysis is a predictive modeling of economic processes and phenomena based on certain theoretical concepts. The purpose of this analysis is to determine the patterns of formation of macroeconomic parameters. Thus, on the basis of ex post analysis, it can be stated that the national income is distributed between consumption and accumulation in the ratio of 3:1. Whether such a ratio corresponds to the conditions of balanced growth in the absence of opportunistic unemployment becomes clear in the course of ex ante analysis.
At present, the widest sections of the population are interested in macroeconomic categories and indicators. Current incomes of people directly depend on the level of national income and employment. The value of family property is directly related to the rate of inflation. The state of a country's balance of payments largely determines the degree of freedom of movement of its inhabitants across state borders.
Economic theory, like other sciences, is designed not only to explain the essence of the processes and phenomena under study and to predict their development, but also to identify the possibilities of people's influence on the course of events. Therefore, economic theory in general, and macroeconomics in particular, has an active influence on the economic policy of the government (fiscal policy, monetary policy, income distribution policy, foreign economic policy). The study of macroeconomics is essential; macroeconomic decisions play a central role in the success or failure of governments. Debates around macroeconomics form special sections in the platforms of political parties or their candidates.
Object and subject of macroeconomics. Historical excursion.
Functions of macroeconomics. Methods of macroeconomic analysis. macroeconomic models.
macroeconomic agents. macroeconomic markets.
The model of the circulation of income and products in the economy. Model of circular flows.
Macroeconomics is a science that studies the economy as a whole, as well as its most important sectors and markets. The term "macro" (large) indicates that the subject of study of this science are large-scale economic problems.
Macroeconomics is a part of economic theory that studies economic relations, categories, laws and patterns that manifest themselves in the national economy and at the interstate level.
economic system is a certain way of organizing the national economy.
The national economy in one country differs significantly from the national economy in another country, depending on the production relations that have developed between various economic entities.
At the heart of the disagreements of economic systems lies:
1. The mechanism for coordinating the activities of business entities.
2. The mechanism for the implementation of ownership of factors of production and produced goods.
3. The mechanism of distribution and redistribution of the created national product.
The object of macroeconomics is the economic system at the level of the national economy.
The subject of macroeconomics is any separate independently operating unit in the economy.
Relations between subjects, connections between them are always ordered, organized, coordinated in one way or another. In the national economy, economic actors are households, firms and the state. Currently, there are two main ways of coordinating the relations of economic entities: market and centralized.
Allocate market economy of free competition - characterized by the dominance of private property, the absence of interference from the state in the activities of business entities.
command economy - all decisions concerning the production and distribution of the product are made by the center, the state form of ownership and central planning prevail.
mixed economy - based on a combination of different forms of management and types of ownership.
Traditional economy - characteristic of economically backward countries, based on customs and traditions.
The most efficient is a mixed economic system. However, even among the mixed economy in the world there is no single model. Based on the historical features of the development of each country, the role and choice of priorities for social development, the following models of a mixed economy are distinguished:
1. Conservative model- provides comprehensive support and stimulation of entrepreneurship, achievement of individual success, enrichment of the most active part of the population. For low-income groups, the state provides an acceptable standard of living through benefits and assistance.
2. Liberal model- characterized by significant state intervention in economic life, the development of the economy is subject to common national interests, and rational interaction between the private and public sectors of the economy is achieved.
3. Social model- this is a kind of unification of the market economy and socialist ideology, a combination of planning and the market, individual and collective forms of ownership.
Subject macroeconomics is the functioning of the mechanisms of the economic system.
As an independent scientific direction, macroeconomics began to form from the beginning of the 30s of the twentieth century, while the formation of microeconomics dates back to the last third of the 19th century. Unlike microeconomics, which analyzes the behavior of individual elements and structures, such as firms, banks, industries, macroeconomics considers the behavior of not specific economic units, but their totality. Macroeconomics deals with the properties of the economic system as a whole, studies the factors and results of the development of the country's economy as a whole.
Just like microeconomics, macroeconomics is based on two fundamental facts. First, people's material needs are limited. Secondly, economic resources, that is, the means for the production of goods and services, are in a limited volume. Limited resources means an imbalance between unlimited needs and relatively limited means to meet those needs. No society has enough resources to produce the volume of goods and services that citizens desire. Therefore, limited resources give rise to choice. If we cannot have everything we want, we have to choose what is most needed. Thus, both the individual and society as a whole must constantly make choices about how to use the limited resources available to them.
Macroeconomics is a branch of economic theory. Translated from Greek, the word “macro” means “big” (respectively, “micro” means “small”), and the word “economy” means “housekeeping”. In this way, macroeconomics is the science that studies the behavior of the economy as a whole orherlarge aggregates (aggregates), at the same time, the economy is considered as a complex large single hierarchically organized system, as a set of economic processes and phenomena and their indicators.
For the first time the term "macroeconomics" was used in his article in 1933 by the famous Norwegian scientist, economist-mathematician, one of the founders of econometrics, Nobel Prize winner Ragnar Frisch(Ragnar Frisch). However, the meaningful modern macroeconomic theory originates from the fundamental work of the outstanding English economist, a representative of the Cambridge School, Lord John Maynard Keynes(John Maynard Keynes). In 1936, Keynes published his book The General Theory of Employment, Interest and Money, in which he laid the foundations of macroeconomic analysis. The significance of Keynes's work was so great that the term "Keynesian Revolution" appeared in the economic literature and appeared Keynesian macroeconomic model or the Keynesian approach as opposed to the traditional, the only classical approach to the study of economic phenomena that existed until that time, i.e. microeconomic analysis (classic model).
The central idea of Keynes is that market economies are not always capable of self-regulation, as the classics believed, since there may be a certain price inflexibility. In this case, the economy cannot independently get out of the depression due to the price mechanism, but state intervention is required in the form of stimulating aggregate demand. The emergence of the Keynesian approach was subsequently called the "Keynesian revolution" in economics. It should also be noted another circumstance that contributed to the formation of macroeconomics. This is the emergence of regular statistics on national accounts. The availability of data made it possible to observe and describe the dynamics and interconnection of macroeconomic phenomena, which is the first necessary step for the development of macroeconomic science.
In the process of development in macroeconomics, two main schools have developed. classical school believed that free markets would themselves bring the economy to equilibrium in the labor market (that is, to full employment) and the efficient allocation of resources and, accordingly, there was no need for government intervention.
Keynesian school proceeded from the presence of a certain inflexibility of prices and, consequently, the failure of the market mechanism in terms of achieving macroeconomic equilibrium, in particular, this referred to the presence of disequilibrium in the labor market, at least in the short term. As a result, such failure of the market mechanism requires the intervention of the state, which takes the form of a stabilization policy.
It should be noted that the Keynesian model adequately described the economy and was widely used until the 1970s. In the 1970s, a new problem arose: the combination of stagnation with high inflation. Many saw the reason for this situation in the active intervention of the government in the economy.
The so-called Keynesian counter-revolution took place. The answer was a revision of the classical paradigm. Neoclassical theories emerged: economic theory returned to the idea of self-regulating markets, but with slightly different institutional premises. The issue of information asymmetry and the concept of expectations of economic agents began to play a key role in economic models.
The answer was the revision of the classical paradigm and the emergence of the doctrine of monetarism, led by its founder Milton Friedman. They returned to the idea of self-regulating markets and brought the money supply to center stage. A stable money supply, rather than constantly changing it to carry out an activist Keynesian policy, is the key to a stable macroeconomic situation, according to monetarists. Monetarism spawned a new wave economic theories, which were based on the self-regulation of markets and formed neoclassical macroeconomics.
In parallel, an alternative neo-Keynesian direction was also developing, but now on the basis of appropriate microeconomic behavioral models that consider price inflexibility in the short term as a response of rational economic agents to certain external conditions.
