Model MakroekonomiModel Makroekonomi
Analisis IS-LMAnalisis IS-LM
Kelas Agribisnis
5 Desember 2011
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Proses Penentuan Proses Penentuan Kegiatan EkonomiKegiatan Ekonomi
Pasar Barang:IS
Kebijakan FiskalInteraksi IS dan LMMenentukan suku
Bunga di kedua pasarKebijakan Moneter
Pasar Uang:LM
Penentuan KegiatanEkonomi: Y dan i pada
keseimbangan
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Analisis Equilibrium: Analisis IS dan LMAnalisis Equilibrium: Analisis IS dan LM
Asumsi:
1. Investasi swasta adalah induced (ditentukan oleh tingkat bunga)
2. Permintaan Uang ditentukan oleh 3 motif
r I AE Y
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Kurva ISKurva IS
Kombinasi antara berbagai pendapatan pada kemungkinan berbagai tingkat bunga
Kurva IS mempunyai slope miring kebawah (downward sloping)
Kemiringan dari kurva IS ditentukan oleh elastisitas tingkat bunga terhadap investasi.
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Terbentuknya kurva ISTerbentuknya kurva IS
Melalui analisis Keynesian
Melalui Investasi + G = Saving +Tax
( empat kudran)
Tingkat bunga dan ADTingkat bunga dan AD
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Need to modify the AD function of the last chapter to reflect the new planned investment spending schedule
An increase in i reduces AD for a given level of income At any given level of i, can determine the equilibrium level of
income and output as in Chapter 9 A change in i will change the equilibrium
biYtcA
XNGbiIYtcRTcC
NXGICAD
)1(
)()1(
The Interest Rate and AD: The IS CurveThe Interest Rate and AD: The IS Curve
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(2) Derive the IS curve using figure 10-5 For a given interest rate, i1,
the last term in equation (2) is constant can draw the AD function with an intercept of
The equilibrium level of income is Y1 at point E1
Plot the pair (i1, Y1) in the bottom panel as point E1 a point on the IS curve
Combination of i and Y that clears the goods market
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(2)
Derive the IS curve using figure 10-5 Consider a lower interest rate, i2
Shifts the AD curve upward to AD’ with an intercept of
Given the increase in AD, the equilibrium shifts to point E2, with an associated income level of Y2
Plot the pair (i2, Y2) in panel (b) for another point on the IS curve
biYtcAAD )1(
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We can also derive the IS curve using the goods market equilibrium condition:
(4)
(5)
where , the multiplier
)(
))1(1(
)1(
)1(
biAY
biAtcY
biAYtcY
biYtcAADY
G
))1(1(
1
tcG
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Bentuk Kurva ISBentuk Kurva IS
IS
i
Y
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Pergeseran Kurva ISPergeseran Kurva IS
Pergeseran komponen-komponen AD
Ketika komponen AD (C,I,X-m) bergeser ke atas maka kurva IS bergerak ke kanan atas dan sebaliknya
Pergeseran kebijakan fiskal pemerintah
Ketika ekspansi kebijakan fiskal (pengeluaran pemerintah) menyebabkan kurva IS bergeser ke kanan atas dan sebaliknya.
Dampak pergeseran terhadap keseimbangan pendapatan tergantung pada besarnya dampak multiplier yang tercipta
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The intersection determines the unique combination of Y and r that satisfies equilibrium in both markets.
The LM curve represents money market equilibrium.
Equilibrium in the Equilibrium in the ISIS--LMLM ModelModel
The IS curve represents equilibrium in the goods market.
( ) ( )Y C Y T I r G
( , )M P L r Y ISY
rLM
r1
Y1
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Policy analysis with the Policy analysis with the ISIS--LMLM Model Model
Policymakers can affect macroeconomic variables with • fiscal policy: G and/or
T• monetary policy: M
We can use the IS-LM model to analyze the effects of these policies.
( ) ( )Y C Y T I r G
( , )M P L r Y
ISY
rLM
r1
Y1
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causing output & income to rise.
IS1
An increase in government purchasesAn increase in government purchases
1. IS curve shifts right
Y
rLM
r1
Y1
1by
1 MPCG
IS2
Y2
r2
1.2. This raises money
demand, causing the interest rate to rise…
2.
3. …which reduces investment, so the final increase in Y 1is smaller than
1 MPCG
3.
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IS1
1.
A tax cutA tax cut
Y
rLM
r1
Y1
IS2
Y2
r2
Because consumers save (1MPC) of the tax cut, the initial boost in spending is smaller for T than for an equal G…
and the IS curve shifts by MPC
1 MPCT
1.
2.
2.…so the effects on r and Y are smaller for a T than for an equal G.
2.
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2. …causing the interest rate to fall
IS
Monetary Policy: an increase in Monetary Policy: an increase in MM
1. M > 0 shifts the LM curve down(or to the right)
Y
r LM1
r1
Y1 Y2
r2
LM2
3. …which increases investment, causing output & income to rise.
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Interaction between Interaction between monetary & fiscal policymonetary & fiscal policy
Model: monetary & fiscal policy variables (M, G and T ) are exogenous
Real world: Monetary policymakers may adjust M in response to changes in fiscal policy, or vice versa.
Such interaction may alter the impact of the original policy change.
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The Fed’s response to The Fed’s response to GG > 0 > 0
Suppose Congress increases G.
Possible Fed responses:1. hold M constant2. hold r constant3. hold Y constant
In each case, the effects of the G are different:
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If Congress raises G,
the IS curve shifts right
IS1
Response 1: hold Response 1: hold MM constant constant
Y
rLM1
r1
Y1
IS2
Y2
r2If Fed holds M constant, then LM curve doesn’t shift.
Results:2 1Y Y Y
2 1r r r
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If Congress raises G,
the IS curve shifts right
IS1
Response 2: hold Response 2: hold rr constant constant
Y
rLM1
r1
Y1
IS2
Y2
r2To keep r constant, Fed increases M to shift LM curve right.
3 1Y Y Y
0r
LM2
Y3
Results:
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If Congress raises G,
the IS curve shifts right
IS1
Response 3: hold Response 3: hold YY constant constant
Y
rLM1
r1
IS2
Y2
r2To keep Y constant, Fed reduces M to shift LM curve left.
0Y
3 1r r r
LM2
Results:
Y1
r3
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Shocks in the Shocks in the ISIS--LMLM Model Model
IS shocks: exogenous changes in the demand for goods & services.
Examples: • stock market boom or crash
change in households’ wealth C
• change in business or consumer confidence or expectations I and/or C
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Shocks in the Shocks in the ISIS--LMLM Model Model
LM shocks: exogenous changes in the demand for money.
Examples:• a wave of credit card fraud increases
demand for money• more ATMs or the Internet reduce
money demand
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IS-LM and Aggregate DemandIS-LM and Aggregate Demand
So far, we’ve been using the IS-LM
model to analyze the short run, when the price level is assumed fixed.
However, a change in P would shift the LM curve and therefore affect Y.
The aggregate demand curve (introduced in chap. 9 ) captures this relationship between P and Y
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Y1Y2
Deriving the Deriving the ADAD curve curve
Y
r
Y
P
IS
LM(P1)
LM(P2)
AD
P1
P2
Y2 Y1
r2
r1
Intuition for slope of AD curve:
P (M/P )
LM shifts left
r
I
Y
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Monetary policy and the Monetary policy and the ADAD curve curve
Y
P
IS
LM(M2/P1)
LM(M1/P1)
AD1
P1
Y1
Y1
Y2
Y2
r1
r2
The Fed can increase aggregate demand:
M LM shifts right
AD2
Y
r
r
I
Y at each value of P
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Y2
Y2
r2
Y1
Y1
r1
Fiscal policy and the Fiscal policy and the ADAD curve curve
Y
r
Y
P
IS1
LM
AD1
P1
Expansionary fiscal policy (G and/or T ) increases agg. demand:
T C
IS shifts right
Y at each value
of PAD2
IS2
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IS-LMIS-LM and and AD-AS AD-AS in the short run & long runin the short run & long run
Recall from Chapter 9: The force that moves the economy from the short run to the long run is the gradual adjustment of prices.
Y Y
Y Y
Y Y
rise
fall
remain constant
In the short-run equilibrium, if
then over time, the price level
will
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The SR and LR effects of an The SR and LR effects of an ISIS shock shock
A negative IS shock shifts IS and AD left, causing Y to fall. Y
r
Y
P LRAS
Y
LRAS
Y
IS1
SRAS1P1
LM(P1)
IS2
AD2
AD1
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The SR and LR effects of an The SR and LR effects of an ISIS shock shock
Y
r
Y
P LRAS
Y
LRAS
Y
IS1
SRAS1P1
LM(P1)
IS2
AD2
AD1
In the new short-run equilibrium, Y Y
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The SR and LR effects of an The SR and LR effects of an ISIS shock shock
Y
r
Y
P LRAS
Y
LRAS
Y
IS1
SRAS1P1
LM(P1)
IS2
AD2
AD1
In the new short-run equilibrium, Y Y
Over time, P gradually falls, which causes• SRAS to move
down• M/P to increase,
which causes LM to move down
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AD2
The SR and LR effects of an The SR and LR effects of an ISIS shock shock
Y
r
Y
P LRAS
Y
LRAS
Y
IS1
SRAS1P1
LM(P1)
IS2
AD1
Over time, P gradually falls, which causes• SRAS to move
down• M/P to increase,
which causes LM to move down
SRAS2P2
LM(P2)
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AD2
SRAS2P2
LM(P2)
The SR and LR effects of an The SR and LR effects of an ISIS shock shock
Y
r
Y
P LRAS
Y
LRAS
Y
IS1
SRAS1P1
LM(P1)
IS2
AD1
This process continues until economy reaches a long-run equilibrium with
Y Y
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Efektifitas Kebijakan FiskalEfektifitas Kebijakan Fiskal
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Efektifitas Kebijakan FiskalEfektifitas Kebijakan Fiskal
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Efektifitas Kebijakan MoneterEfektifitas Kebijakan Moneter
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Efektifitas Kebijakan MoneterEfektifitas Kebijakan Moneter