An example of development of macroeconomic models
The following is an example of the model that is often taught in courses on macroeconomics, although our exhibition will be more simplified and ignore many things. It’s just one example of a sample and not used to study any real economy in earnest.
Study the economics of an imaginary country (or anywhere else) looking at the variables of the national accounts.
Consider income (Y) as the sum of all goods and services produced within a period of time, for example one year. However, some of these goods and services have been used for consumption by the population, ie (C) be the consumer, others will have served to enable companies to replenish their capital requirement for the production (machinery, tools, materials premiums, etc.), this is called inversion (I), for its part, the government has also intervened in the economy by consuming goods and services to make them public or intervened through public companies in the market, what we call public spending (G). We have imported goods from abroad through imports (IM) and have been exported abroad through exports (X).
Then we can represent this sum as income: Y CGIX ‘IM
The reason that import pass “rest” is: the side of the equation and IM is that we used all the money spent in the period, total production of goods and services and imports, and in which it has used all that had been sued during the period: CIGX (as some of these variables have taken part in the production of domestic and imports). Therefore Y CIGX IM, and IM from the other side, we have Y X-IM IGC. Call and we can simplify the last two variables “Net” and shows the following:
Y C G I XM
We must now introduce factors that influence consumption. Consumption is assumed to be a part of the disposable income of consumers. But, What is disposable income “may think it is Y, but the government needs as part of that income to fund public spending (G), we can assume that disposable income is income and once the government has held a party in the form of taxes, and introduce a simplified tax rate for a (t) (with 0
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