The Integration of Macro and Microeconomic Relations in Dynamic Policy Models: The Case of Saving and Investment Behavior
IMF Working Papers, April 1, 1990
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- The Integration of Macro and Microeconomic Relations in Dynamic Policy Models: The Case of Saving and Investment Behavior
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Bibliographic details
- Authors: Ary Lars Bovenberg
- Published: April 1, 1990
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451978759.001
Overview
- Paper examines how two types of fiscal policy models—dynamic macroeconomic models and applied general equilibrium models—have integrated macro- and microeconomic relationships within a framework of intertemporal equilibrium.
- Emphasizes potential advantages of integrating macro- and microeconomic relations.
- Discusses limitations of intertemporal equilibrium models, particularly weaknesses of saving and investment theories incorporated in the models.
- Concludes that, despite recent important advances, policymakers need to exercise caution when they interpret results derived from these models.
Key findings and substantive points
- Integration of macro- and microeconomic relations can offer potential advantages for fiscal policy modeling.
- Intertemporal equilibrium models used in the literature exhibit important limitations.
- Weaknesses identified are concentrated in the saving and investment theories incorporated in intertemporal equilibrium models.
- Despite recent important advances in modeling, interpretation of model results requires caution by policymakers.
Subject areas and keywords (as provided)
- Subjects: Capital income tax, Econometric analysis, Fiscal policy, General equilibrium models, Income, National accounts, Private savings, Taxes
- Keywords: capital, Capital income tax, economy, General equilibrium models, incentive effect, Income, investment, investment behavior, investment function, investment theory, market, Private savings, representative investment, welfare effect, WP