The Integration of Macro and Microeconomic Relations in Dynamic Policy Models: The Case of Saving and Investment Behavior

April 1, 1990

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Format: Chicago

Ary Lars Bovenberg. The Integration of Macro and Microeconomic Relations in Dynamic Policy Models: The Case of Saving and Investment Behavior, (USA: International Monetary Fund, 1990) accessed September 20, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines how two types of fiscal policy models, namely, dynamic macroeconomic models and applied general equilibrium models, have integrated macro- and microeconomic relationships within a framework of intertemporal equilibrium. After emphasizing the potential advantages of integrating macro- and microeconomic relations, the study discusses the limitations of intertemporal equilibrium models--in particular the weaknesses of saving and investment theories incorporated in the models. It concludes that, despite recent important advances, policymakers need to exercise caution when they interpret results derived from these models.

Subject: 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

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1990/034
Stock No:

WPIEA0341990
ISBN:

9781451978759
ISSN:

1018-5941

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