Basic assumption: (1) The whole society only produces one product; (2) The saving function is S=s, s constant, 0.

The basic formula of neoclassical growth model: sf(k)=k+nk.

This basic formula shows that a society's per capita savings (sf(k)=sY/L) can be used in two parts: one part is the increase of per capita capital (K), that is, to equip everyone with more capital equipment, which is called the deepening of capital; The other part is to equip each increased population with the capital equipment (nk) that everyone deserves on average, which is the so-called capital popularization.

Decomposition of growth rate: g = a △ l/l+(1-a) △ k/k.

G stands for growth rate, △L/L and △k/k stand for labor growth rate and capital growth rate respectively, and A and (1-A) stand for the contribution of labor and capital to economic growth respectively. (1-a): A is the ratio of capital to labor.

The meaning of neoclassical growth model: In order to make the actual growth rate consistent with the guaranteed growth rate and natural growth rate, we can change the labor growth rate, capital growth rate and capital-labor ratio. The change of the ratio of capital to labor is realized through the adjustment of market mechanism.

The principle of the invisible hand

The principle of "invisible hand" was first put forward by Adam Smith in The Wealth of Nations. The meaning of this proposition: everyone in society is striving for personal satisfaction. Generally speaking, he doesn't try to improve the public welfare, and he doesn't know how much he has improved the public welfare, but when he does, he is guided by an invisible hand to promote social interests, and the effect is greater than what he really wants to promote social interests.

This invisible hand is actually that people consciously adjust their behavior according to the role of market mechanism to maximize consumption utility and profit. This principle can only be fully described in general equilibrium theory. Specifically, there are the following five points:

(1) Under the constraint of given income, the maximization of consumer utility depends on the equal marginal substitution rate of any two commodities;

(2) In a perfectly competitive market, the maximization of manufacturer's profit depends on the product price = marginal cost = marginal revenue;

(3) In order to maximize profits, manufacturers decide the input of production factors according to the optimal combination of production factors, so that the marginal rate of technical substitution of any two production factors is equal to the ratio of the corresponding factor prices.

(4) In the factor market, the manufacturer pays the compensation to the factor owner according to the marginal product value of the factor, and obtains the compensation income of the factor, and determines the corresponding factor supply according to the maximization of its own utility.

(5) The market regulates the supply and demand sides. The spontaneous function of market mechanism makes the whole social economy in a general equilibrium state (Pareto optimal standard). In this case, consumers get the maximum satisfaction from consumer products, manufacturers get the maximum profit, and production factors get remuneration income according to their respective contributions in production.

The principle of "invisible hand" emphasizes that in a perfectly competitive market, the market mechanism can efficiently realize the rational and effective allocation of resources, and ultimately it is impossible for society to improve the situation of some people without affecting others.

Demand-oriented growth

Expanding consumer demand is the main aspect of stimulating economic growth. consume

Both demand and export demand belong to the final demand, and only the final demand has increased.

Only sustained economic development can be guaranteed.

Li Yining, a professor at Peking University, pointed out that consumer demand is the current.

Circumstances can stimulate economic growth for four main reasons: first, residents.

Daily necessities and durable consumer goods need to be constantly updated. So, on the one hand,

Higher consumption level, on the one hand, increases the total consumption demand; Second, cancel.

The increase in demand for expensive goods can promote the re-employment of urban workers, while the employed population

If it is increased, it will bring purchasing power, which in turn will bring more consumption and needs.

There are many consumer goods, that is, employment drives consumption; Third, the current expansion

There should be a big rural market. Farmers produce food for urban consumption. if

With the expansion of consumer demand, farmers' income can increase, and farmers' income can also increase.

The future will drive the production of industrial products. Therefore, expanding the demand for consumer goods,

Can make the rural market and industrial products market develop; Fourth, production.

The purpose is to improve people's living standards and quality of life. Quality of food, clothing, housing and transportation

With the improvement of quantity and quality requirements of consumer goods, new consumer goods,

New consumption patterns are constantly emerging. Therefore, except for fundamentally expanding consumer demand.

In addition to consumer goods, it also includes culture, sports, education, tourism and other consumption.

This kind of consumption is called "intangible consumption" and "labor consumption".

Expanding residents' consumption is not in contradiction with the thrifty housekeeping we have always advocated.

Consumption habits such as weddings, banquets, ostentation and extravagance, and debt consumption are harmful to production.

Unfavorable, unfavorable to social atmosphere, unfavorable to the improvement of residents' lives.

Improve the quality of life of residents by improving their lives and increasing household durable consumer goods.

A symbol of.

References:

Professor Li Yining talks about western economics.