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The Integration of Macro and Microeconomic Relations in Dynamic Policy Models: The Case of Saving and Investment Behavior
Author:
Ary Lars Bovenberg null

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Series:
IMF Working Papers
Volume/Issue:
Volume 1990: Issue 034
Language:
English
Publication Date:
01 Apr 1990
DOI:
https://doi.org/10.5089/9781451978759.001
ISBN:
9781451978759
ISSN:
1018-5941
Pages:
24
Keywords:
WP; investment; investment behavior; capital; economy; incentive effect; market; investment function; representative investment; investment theory; welfare effect; General equilibrium models; Private savings; Capital income tax; Income
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund