lectures in macroeconomics- charles w. upton why americans work harder
Post on 21-Dec-2015
222 views
TRANSCRIPT
![Page 1: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/1.jpg)
Lectures in Macroeconomics- Charles W. Upton
Why Americans Work Harder
.
)]100log([log1
i
iii hcU
![Page 2: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/2.jpg)
Why Americans Work Harder
GDP and Hours Worked, G7
Country
Hours Per
Week Per
Person 15-64
GDP Per Hour
(US=100)
GDP Per Person 15-64
(US =100)
Germany 19.3 99 74France 17.5 110 74Italy 16.5 90 57Canada 22.9 89 79United Kingdom 22.8 76 67Japan 27.0 74 78United States 25.9 100 100
![Page 3: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/3.jpg)
Why Americans Work Harder
GDP and Hours Worked, G7
Country
Hours Per
Week Per
Person 15-64
GDP Per Hour
(US=100)
GDP Per Person 15-64
(US =100)
Germany 19.3 99 74France 17.5 110 74Italy 16.5 90 57Canada 22.9 89 79United Kingdom 22.8 76 67Japan 27.0 74 78United States 25.9 100 100
![Page 4: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/4.jpg)
Why Americans Work Harder
GDP and Hours Worked, G7
Country
Hours Per
Week Per
Person 15-64
GDP Per Hour
(US=100)
GDP Per Person 15-64
(US =100)
Germany 19.3 99 74France 17.5 110 74Italy 16.5 90 57Canada 22.9 89 79United Kingdom 22.8 76 67Japan 27.0 74 78United States 25.9 100 100
GDP Figures are
OECD Purchasing
Power Parity
Data are 1993-1996
figures
![Page 5: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/5.jpg)
Why Americans Work Harder
1970-74 Data
Country
Hours Per Week Per Person 15-64
GDP Per Hour
(US=100)
GDP Per Person 15-64
(US =100)
Germany 24.6 72 75France 24.4 74 77Italy 19.2 65 53Canada 22.2 91 86United Kingdom 25.9 62 68Japan 29.8 49 62United States 23.5 100 100
17.5
25.9
![Page 6: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/6.jpg)
Why Americans Work Harder
1993-1996 Data
Country
Hours Per
Week Per
Person 15-64
GDP Per Hour
(US=100)
GDP Per Person 15-64
(US =100)
Germany 19.3 99 74France 17.5 110 74Italy 16.5 90 57Canada 22.9 89 79United Kingdom 22.8 76 67Japan 27.0 74 78United States 25.9 100 100
24.4
23.5
Why the differences? And why the
changes?
![Page 7: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/7.jpg)
Why Americans Work Harder
1993-1996 Data
Country
Hours Per
Week Per
Person 15-64
GDP Per Hour
(US=100)
GDP Per Person 15-64
(US =100)
Germany 19.3 99 74France 17.5 110 74Italy 16.5 90 57Canada 22.9 89 79United Kingdom 22.8 76 67Japan 27.0 74 78United States 25.9 100 100
24.4
23.5
Why the differences? And why the
changes?
Lets look at a model by Edward Prescott
![Page 8: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/8.jpg)
Why Americans Work Harder
Utility in the Prescott Model
4321 loglogloglog ccccU
![Page 9: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/9.jpg)
Why Americans Work Harder
The Immortal Consumer
.
...loglog
logloglog
loglogloglog
55
44
33
22
1
4321
cc
cccU
ccccU
![Page 10: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/10.jpg)
Why Americans Work Harder
Allowing for Leisure
.
)100log(log ii hc
![Page 11: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/11.jpg)
Why Americans Work Harder
The Final Equation
.
)]100log([log
...)]100log([log
)]100log([log
1
22
2
11
iii
i hcU
hc
hcU
![Page 12: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/12.jpg)
Why Americans Work Harder
Optimization
.
))(1(
)1(
)1()1(
)]100log([log1
ttttk
ttw
txts
iii
i
Tkkr
hw
xc
hcU
![Page 13: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/13.jpg)
Why Americans Work Harder
Optimization
.
))(1(
)1(
)1()1(
)]100log([log1
ttttk
ttw
txts
iii
i
Tkkr
hw
xc
hcU
![Page 14: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/14.jpg)
Why Americans Work Harder
Optimization
.
))(1(
)1(
)1()1(
)]100log([log1
ttttk
ttw
txts
iii
i
Tkkr
hw
xc
hcU
![Page 15: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/15.jpg)
Why Americans Work Harder
Optimization
.
))(1(
)1(
)1()1(
)]100log([log1
ttttk
ttw
txts
iii
i
Tkkr
hw
xc
hcU
![Page 16: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/16.jpg)
Why Americans Work Harder
Optimization
.
))(1(
)1(
)1()1(
)]100log([log1
ttttk
ttw
txts
iii
i
Tkkr
hw
xc
hcU
![Page 17: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/17.jpg)
Why Americans Work Harder
Optimization
.
))(1(
)1(
)1()1(
)]100log([log1
ttttk
ttw
txts
iii
i
Tkkr
hw
xc
hcU
![Page 18: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/18.jpg)
Why Americans Work Harder
The Production Function
ittiit
itititit
XKK
LKAY
)1(1,
1
![Page 19: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/19.jpg)
Why Americans Work Harder
The Tax on Consumption and Wages
s
wsw
1
*
![Page 20: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/20.jpg)
Why Americans Work Harder
Hours Worked
)1(1
1
*w
it
yc
h
![Page 21: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/21.jpg)
Why Americans Work Harder
Hours Worked
)1(1
1
*w
it
yc
h
The higher the value of leisure (i.e., the
higher the value of θ) the fewer hours
worked
![Page 22: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/22.jpg)
Why Americans Work Harder
Hours Worked
)1(1
1
*w
it
yc
h
The higher the value of leisure (i.e., the
higher the value of θ) the fewer hours
worked
The higher the tax rate (i.e., the higher the value of τ) the fewer hours worked
![Page 23: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/23.jpg)
Why Americans Work Harder
Fitting the Model
Country Tax rate τ c/y Actual Predicted
Germany 0.59 0.74 19.3 19.5
France 0.59 0.74 17.5 19.5
Italy 0.56 0.69 16.5 18.8
Canada 0.52 0.77 22.9 21.3
United Kingdom 0.44 0.83 22.8 22.8
Japan 0.37 0.68 27.0 29.0
United States 0.40 0.81 25.9 24.6
![Page 24: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/24.jpg)
Why Americans Work Harder
Fitting the Model
Country Tax rate τ c/y Actual Predicted
Germany 0.59 0.74 19.3 19.5
France 0.59 0.74 17.5 19.5
Italy 0.56 0.69 16.5 18.8
Canada 0.52 0.77 22.9 21.3
United Kingdom 0.44 0.83 22.8 22.8
Japan 0.37 0.68 27.0 29.0
United States 0.40 0.81 25.9 24.6
The differences
are consistent with the tax
rates.
Moreover, the change is consistent
with changes in tax rates.
![Page 25: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/25.jpg)
Why Americans Work Harder
Are Europeans Better Off?
D
SSRSLR
H*
w*
Hτ
Some argue that
Europeans are better off.
They get less income but
more leisure.
![Page 26: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/26.jpg)
Why Americans Work Harder
Are Europeans Better Off?
D
SSRSLR
H*
w*
Hτ
Some argue that
Europeans are better off.
They get less income but
more leisure.
Any tax involves an
efficiency loss.
![Page 27: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/27.jpg)
Why Americans Work Harder
Are Europeans Better Off?
D
SSRSLR
H*
w*
Hτ
US
France
![Page 28: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/28.jpg)
Why Americans Work Harder
Are Europeans Better Off?
D
SSRSLR
H*
w*
Hτ
US
France
Prescott estimates that if France reduced its taxes to US rates, it would
amount to a 19% gain in
consumption
![Page 29: Lectures in Macroeconomics- Charles W. Upton Why Americans Work Harder](https://reader035.vdocuments.net/reader035/viewer/2022081514/56649d605503460f94a41972/html5/thumbnails/29.jpg)
Why Americans Work Harder
End
©2004 Charles W. Upton. All rights reserved