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Chapter 17. Investment

Chapter 17. Investment. Homework : pp. 517-18 #1, 4 or 5 Some sections omitted from previous edition. Link to syllabus. Other text. The volatility of investment. Fig. 17-1, p. 498. Three Components of Investment. Fig. 17-2, p. 499. The Rental Price of Capital.

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Chapter 17. Investment

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  1. Chapter 17. Investment Homework: pp. 517-18 #1, 4 or 5 Some sections omitted from previous edition. Link to syllabus

  2. Other text. The volatility of investment

  3. Fig. 17-1, p. 498. Three Components of Investment

  4. Fig. 17-2, p. 499. The Rental Price of Capital

  5. Fig. 17-3, p. 503. The Investment Function

  6. Fig. 17-4, p. 507. Stock Market and Economic Activity “Predicted seven out of the last five recessions.”

  7. James Tobin, 1918-2002 Born in Champaign, Illinois Taught mostly at Yale B.A., Ph.D. at Harvard Nobel prize, 1981 Served in the navy during WWII. Worked in the CEA, Fed’s Board of Governors, and the Treasury Department. Prominent early Keynesian. Highlights in his academic career: Consumption function, many contributions to monetary theory, the proposed Tobin tax – which would restrict short term (speculative) capital flows, Tobit functions in econometrics, his ‘q’ theory of investment. He supported gov’t programs guaranteeing a minimal income.

  8. Fig. 17-5, p. 511. The Determinants of Residential Investment.

  9. Fig. 17-6, p. 512. An Increase in Housing Demand

  10. Figure 17-7 p. 513. Housing Market from 2000 to 2011 Case-Shiller Index of prices Seems to be a strong response in housing to a small price change.

  11. Sixth edition? Table 17-1, p. 475 Mortgage payments are ¼ to 1/3 of monthly income, plus tax deductions

  12. Click Accelerator Example

  13. Previous Edition? Fig. 17-7, p. 478. Evidence for the Accelerator.

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