What markets does macroeconomics take as a basis? Monetary policy and its goals. Monetary policy instruments. Development and measurement of the effect of socio-economic policies

We are publishing the text based on the lecture by NES professor, director of the Master of Economics program Oleg Zamulin, given on November 17, 2010 at the Polytechnic Museum as part of the series of lectures by NES professors “Economics: simply about complex things.” This is the second lecture in the series.

« Nobel laureate in economics Robert Solow said in the 60s:...Macroeconomics is over in the sense that we created new science, which literally didn’t exist thirty years ago,”"WITHThe most bloodthirsty time in macroeconomics was the 70s, When did the so-called rational expectations revolution occur?»

What does macroeconomics study? At the very beginning, macroeconomics studied the behavior of variables such as GDP, inflation, exchange rates, etc., without any attention to micro-details, to the behavior of individual microeconomic agents. Today we will learn how macroeconomics has changed over time and why.

Logically, modern macroeconomics is no different from microeconomics. In macroeconomic science, the same economic agents are modeled. Microeconomics studies the behavior of individual economic agents, each of which has a goal and strives for this goal, but also has certain restrictions that nature and its abilities impose on it. Economists try to study exactly how these decisions are made, within what constraints these decisions are made, and how this leads to the equilibrium we see in economic data. Therefore, the differences between macroeconomics and microeconomics are for study purposes, but not for methodology. Although thirty years ago it could be said that methodologically these sciences are also different. Now you can’t say that anymore.

In macroeconomics it is very important to distinguish between two time perspectives, and this is where we see quite a big difference in both models and methods of approach. Although often, now these two perspectives are being modeled within the same models.

The first perspective is long-term growth. We look at why economies grow over the long term, why some economies grow faster and some slower, why some economies are now rich and some remain poor. The long-term trend is that long-term growth is determined more by the supply side, by how much the economy can produce in the long term. It depends on the availability of production factors: how much skilled labor, how much capital capacity, what level of technology. In the long run, the ability to produce is determined by how much we can produce, i.e. physical abilities. And then the question arises: why capital accumulates, why technological progress occurs, why it happens in some countries and not in others.

The second perspective is short-term fluctuations. There are fluctuations around the long-term trend. Again, in developed countries The main discussion in society and government is precisely about these fluctuations. It would seem that long-term growth is much more important thing than fluctuations around the trend. But both America and the European Union pay attention to short-term fluctuations, how much GDP grew in this quarter or that quarter, etc. This is most likely because these countries have been growing at a more or less constant rate for many decades, with that rate being determined by technological progress. There is some discussion about how to try to make this growth faster, but growth limited opportunities, and now it is important to make sure that there is as little hesitation as possible. Conduct monetary and fiscal policy in such a way as to smooth the economy so that there are no booms or unnecessary recessions. This is precisely what the debate in developed countries is about. In developing countries, the discussion, as a rule, revolves around the question of how to make growth faster and how to catch up with developed countries in the fastest way. In Russia, we certainly think more about how to double GDP in ten years than about why one quarter's growth was greater or less than another quarter's. This is quite typical for most countries at a level of development similar to Russia. However, I will still talk about short-term fluctuations. This is necessary for two reasons: firstly, we need to understand global trends, and secondly, in the future, if our level of development reaches such that short-term fluctuations begin to worry us more and more, we need to understand what will happen in this moment. As an example, we can cite the recent public discussion on whether the devaluation that occurred in Russia should have been made smooth, as actually happened, or whether everything should have been done much faster, as many experts advised back in the fall of 2008. This is one of such questions that relate specifically to the short term, and not to long-term trends. Most likely, the current crisis is a short-term, as I hope, fluctuation in the history of macroeconomics. Once again, I want to draw attention to the importance of distinguishing between short-term fluctuations and long-term trends.

Macroeconomic science, which appeared in the thirties as a result of the Great Depression, changed very much during these seventy years, there were constant refutations of previous theories, there was an evolution, a struggle between various clans in macroeconomic science. If you look at all this from the outside, it may seem that macroeconomics is a science that is not worth studying, there are too many disputes in it, and if scientists cannot agree among themselves, can they really say something smart? However, from all these revolutions that took place in macroeconomics, each time we learned a very, very useful lesson for ourselves. If you and I go through the history of macroeconomics together, it will be much easier for us to understand what we can bear today.

An important lesson that macroeconomic policymakers around the world are now learning came precisely from the analysis of the Great Depression. Nowadays, the experience of the Great Depression is being studied a lot both in the press and in scientific discussions. Many of the mistakes that were undoubtedly made we do not want to repeat. Until the 30s, there was no definition of “macroeconomics” at all; it appeared at the very end of the 30s, maybe even in the forties. Before this, there was simply economics, which studied the behavior of economic agents, but then the Great Depression occurred, which was impossible to explain within the framework of the existing theory. Adam Smith, Alfred Marshall introduced microeconomic theory in formal form, but in all this science there was absolutely no explanation for why, for such a long time, in so many countries, production could fall by a third, and unemployment rise to twenty-five percent. By classical theory unemployment cannot be twenty-five percent; to be even more precise, there is no involuntary unemployment in classical theory. Because an unemployed person can always offer his services at a lower salary than the salaries that exist in the market, and producers will prefer to hire this person, that is, unused factors of production cannot exist in an equilibrium classical economy.

An alternative theory was needed, and such a person appeared - John Maynard Keynes. Keynes proposed a theory that was based on the theory of aggregate demand. Again, this phrase was not particularly popular before Keynes; it was believed that the level of an economy is determined by the existing factors of production, by what it can produce, and not by how much people want to consume. However, it is not enough to assume that the economy is dictated by aggregate demand. According to classical theory, if demand for some goods has fallen, then the price should fall to such a level that demand will recover again. If total GDP is determined by the number of existing factors in the economy, and these factors should all be employed in equilibrium according to classical theory, a simple fall in demand should lead to a fall in prices. And here lies the second Keynesian assumption, which survived all these revolutions and is still alive. It lies in the fact that prices do not perform the function in the short term that classical theory prescribes for them; prices are rigid - they adjust over a long period of time and slowly. By prices we mean, among other things, the prices of factors of production, such as wages. Here is a brilliant example of this made explicit. In 29, when it was still unclear what scale the depression would take, President Hoover called the leaders of American industry to a meeting and told them that some kind of recession was clearly beginning, let us all together support demand in the economy, specifically I ask There will be no reduction in your salaries, but I will negotiate separately with the trade unions. This was a completely obvious conspiracy between President Hoover and large industrialists. The industrialists agreed, after which Hoover actually summoned the trade union leaders and told them that he had agreed that wages would not be lowered, but that they were now expected to avoid strikes; they also agreed. But when demand fell, and no one needed these workers at such wages, the industrialists, who agreed only on wages, simply fired a significant part of the workers. Of course, these were not the same workers who were represented by the union leaders at Hoover’s reception, so the union leaders did not particularly object to this. This refusal to adjust prices (fall wages) in response to falling demand led to massive layoffs of large numbers of workers. By the way, this happened only in industry, and in the agricultural sector, which was much more competitive and much more numerous, there was no such collusion. As a result, in this sector we saw a completely opposite picture: wages dropped quite significantly, and unemployment did not increase particularly, that is, farmers continued to hire as much labor as they hired.

Regardless of the presence of obvious collusion, we still often see voluntary price rigidity, and we see that manufacturers and sellers often prefer not to change their prices, often for a variety of reasons, one of the reasons may be the desire to maintain the loyalty of their regular customers. Changing an employee's salary is a painful thing; usually salaries are tightly fixed by contract, especially if trade unions are strong, it is very difficult to reduce salaries. Therefore, this rigidity of prices and wages is only a short-term phenomenon; in the end, no collusion and no loyalty can protect wages from reaching an equilibrium stationary state. But in the short term, which could last a couple of years, wages and prices could be tight. They may not adjust to the new equilibrium, and in such a situation, fluctuations in demand will not cause a change in prices, but rather a change in the quantity of output in the economy, which, in fact, happened during the Great Depression. Wages began to fall after about a year, the industrialists said that they could not keep wages at this level, otherwise they could not produce goods that could be sold, so they refused to continue this agreement and began to lower wages, and, accordingly, prices for goods and services produced. There is a lot of data that suggests that during the Great Depression, real wages increased, that is, there was deflation, prices fell, and wages fell less than these prices, and therefore, in a real sense, those workers who were not laid off, they earned more and more. This clearly did not correspond to the powerful drop in demand that occurred, this is one of the deviations from the ideal market equilibrium that Keynes drew attention to.

The second obvious deviation is incomplete information. To a large extent, the Great Depression developed through the banking system, just like the current crisis. Banks and the banking system are the very environment where trust and dependence on information play a key role. When people saw banks collapse, they ran to their bank and took all the money out of it, even if their particular bank was, in general, quite solvent. Just as banks were looking for someone to lend to when they saw massive business bankruptcies, they ended up choosing not to lend to other businesses, even those that were quite solvent. It is the incompleteness of information, which is also absent in classical economic theory, that is the second assumption demonstrating that markets, especially in the short term, are imperfect, they have many deviations from the ideal equilibrium that Smith and Marshall described. It was on these ideas that, in fact, Keynesian macroeconomics was born. Keynes had no particular explanation for why demand fell. He explained it by the presence of “animal spirit of investors”, animal instincts. Investors can be pessimists, they can be optimists, they can go into a period of pessimism, and therefore they prefer to stop investing, not thinking that the future will be as joyful as the immediate past was.

If the problem was classified precisely as a drop in demand, that is, not the ability of the economy to produce, but the desire of consumers to buy, then the recipe for treating the problem was obvious. If the economy itself does not want to consume the products produced, then it is necessary to somehow force the economy to consume, and for this purpose government policies can be applied to stimulate demand. There are two options for this public policy, the first is monetary policy - to give people more money and let them spend it, the second way is fiscal policy: if the private sector does not want to consume the goods and services produced in the economy, then it needs to be done for them. What does the public sector do in this case, give government orders for the construction of roads, for something else, and thus stimulate demand in the economy, hoping to pull the economy out of depression. Keynes was initially a big supporter of fiscal policy; he believed that monetary policy did not work, and drew attention to the fact that interest rates were practically zero during the depression. That is, banks could easily take money from the Federal Reserve System and give this money further at a very low interest rate to the economy. But no one wanted to take this money, so a situation arose that Keynes called a “liquidity trap.” It is impossible to stimulate the economy monetary methods, you can offer money, but no one will take it and build something with this money. If we believe that investment is going too fast, that this is leading to overheating of the economy, to too optimistic growth, then we can cool it down by raising interest rates. But it is impossible to force the economy to grow, it already depends on the desire of investors to build factories, and if they believe that demand will be low for the next few years, then accordingly they will not invest and will not build, no matter what low interest rates they are offered . Therefore, it is useless to try to stimulate the economy using monetary methods. That is why early Keynesian theory said that it is much more effective to stimulate demand through budgetary measures, increase government spending, or lower taxes.

Unfortunately, in public discussion, even among many economists, the main characteristic of Keynesian macroeconomic theory is often considered to be precisely the point that Keynesianism is the desire to regulate the economy more. This is a misconception of Keynesianism. First of all, Keynesian theory says that the market is not in equilibrium at every point in time, and where the market is is determined by the level of aggregate demand. This is not a normative, but a positive assessment. This is a discussion of how it is, not how to react to it. And the next step, whether the state therefore needs to intervene and try to bring the market to equilibrium, is not so obvious. Actually, Keynesian theory can say something on this topic, but not everything, because, on the one hand, we know well that the market itself cannot cope and can lead to quite large deviations from equilibrium, to quite large cataclysms, but this does not mean that government intervention will make things better. It is entirely possible for the market to fail, but intervention will make the situation even worse. This is the second question, which is more a question of the practice of macroeconomic policy, and not of Keynesian macroeconomic theory itself. Keynes himself, as a person giving advice to the government, believed that intervention was needed precisely in the form of increasing government spending to stimulate aggregate demand.

If we turn to modern times, we see that Ben Bernanke, the head of the US Federal Reserve, is buying hundreds of billions of US Treasury bonds, that is, actually financing the budget deficit in order to add money to the economy, believing that there is not enough of it now.

So, Keynesian macroeconomics dominated in the 40-60s after the recovery from the Great Depression, after the Second World War, when economies began to grow again. Its general ideas were that the economy was subject to fluctuations in demand, and the word "supply" was not introduced at all; that the market does not immediately bring the economy to equilibrium; that it makes sense to artificially stabilize the economy. Namely, the goal of macroeconomic policy was an attempt to maximize demand in the economy, and thus reduce unemployment to the lowest possible level. Fiscal policy was considered more effective than monetary policy, and it was these methods, both lowering taxes and increasing government spending, that were practiced by politicians at different periods of time. D. Kennedy also called for lowering taxes, when he was asked about the rationale, he answered, haven’t you read a textbook on macroeconomics, it also says that this will stimulate the economy and it will grow faster, which is especially important during a recession and before elections . There was also the Keynesian idea that the market needed regulation.

What was learned from this theory? Nobel laureate in economics Robert Solow said in the 60s: “Macroeconomics is finished.” Macroeconomics is over, in the sense that we have created a new science that literally did not exist thirty years ago, now our job is to make clarifications and better understand the models that we have created, make additions to them and study individual issues . Around the same time that the Keynesians were celebrating their victory, alternative theories began to emerge that would ultimately lead to the collapse of early Keynesianism. And the first such theory was called “monetarism,” which was actually created by another great macroeconomist, Milton Friedman.

In their book, Milton Friedman, along with Anna Schwartz, demonstrated that from 1929 to 1933 the money supply in the United States fell by a third, and came to the conclusion that the Great Depression was not actually the result of some animal instincts of investors, but was a failure of money. authorities. That the Federal Reserve System failed to cope with the task that was entrusted to it and allowed a powerful fall money supply, and even largely provoked a powerful drop in the money supply, and this is what led to the Great Depression. Which went against Keynes's assertion that there was a lot of money in the economy. Keynes believed that the economy does not want to take money, even though there is plenty of money when interest rates are low, so it is useless to try to stimulate the economy with money. Friedman believed that it was precisely the too careless attitude towards the money supply in the economy that led to such consequences and these thoughts led to an alternative paradigm in macroeconomics called “monetarism”. This is quite an old paradigm, just like the early Keynesian theory, an outdated paradigm, but, nevertheless, in the 60-70s it was quite relevant. Again, the word “monetarism,” like “Keynesianism,” is often misused in modern public discourse. Nobel laureate Paul Krugman agrees with Friedman that it was a government error, but disagrees with the wording. It is not enough to blame the central bank for creating the depression; it is necessary to understand the reasons for the error, what happened.

The secret lies in the gold standard system that existed in the world at that time. The main research on this issue was carried out by the famous scientist Ben Bernanke, who is no longer a scientist, but the head of the US Federal Reserve. In some ways, he became the head of the Fed at a good time, because he studied monetary policy in the world during the Great Depression more than anyone else in the world, being an academic economist. Before the First World War, there was a fairly successful, but not very strict gold standard, when all countries pegged their currencies to gold. There was a clear parity between the monetary unit and the ounce of gold; accordingly, this fixed the exchange rates between currencies. Gold was the same price everywhere, but each central bank tried to manipulate interest rates in its country so as to prevent a large outflow or inflow of gold from its country. Therefore, the amount of gold in each central bank remained more or less constant, this system worked quite smoothly, although it worked only on the authority of the Bank of England, which seemed to set the tone for this policy. No one tried to compete for gold, no one tried to attract more gold to their country. The policy, as I have already noted, was carried out only to prevent the outflow or excessive inflow of gold, so that capital flowed, but not gold reserves, and this ensured a certain stability that lasted until the First World War.

After the First World War, there was some attempt to restore this gold reserve, but this attempt was less successful; the Bank of England no longer had authority. Firstly, because another one arose powerful country– The USA, which has not played such a role before. Secondly, after the war, countries trusted each other even less, so competition appeared and the desire of central banks to fight for the gold that they kept. Banks were afraid that gold might flow out of their country, and tried to attract even more of this gold, just in case. In the new situation, central banks could not decide what to do in the event of payment imbalances. If you have a budget deficit, a trade deficit, the country buys more abroad than it sells abroad, this leads to an outflow of gold from the country. And central banks did not understand how to prevent this outflow. As a result, a global deflationary trend emerged; there were countries with trade deficits, that is, countries that bought abroad more than they sold abroad, for this it was necessary to borrow money abroad, and therefore there was additional demand for foreign currency. People actually sold their currency to a central bank, bought gold, sold that gold to another central bank for their currency, and used that currency to buy imports that they brought into their country. Therefore, trade deficits led to a fall in the money supply in the country. The increase in the amount of gold in other countries corresponded to the increase in the money supply in those countries. Central banks were forced to issue additional francs and dollars in response, and the United States and France were afraid that this could lead to excessive inflation, they were afraid of issuing additional money, and in response they sterilized this money supply, that is, they issued some kind of bonds, thereby redeeming the money mass in exchange for bonds.

Thus, in some countries there was no increase in the money supply, it was sterilized, while in other countries there was a reduction in the money supply. At the end of the 20s, the same deflationary trend emerged in the world - a reduction in the money supply. The reasons were that the gold reserves were poorly managed and there was an asymmetry in the behavior of the central banks of countries with a trade deficit and a trade surplus. The two main countries that had trade surpluses were France and the United States. France, first of all, received this money and sterilized the issued monetary base, but the monetary base still did not grow enough to cover the growing demand for money, this led to deflation of 11% already in 1929. The US, seeing high interest rates in France, became afraid that this might attract capital to France, that people would get rid of dollars, buy gold from the Fed and send it to France. They feared for their gold, and wanted to protect their country's gold reserves by raising high interest rates in 1929, thus causing a contraction in the money supply and a reduction in lending to their own economy. This was the first blow that was dealt to the money supply of these two countries. Other countries began to respond absolutely symmetrically, since interest rates were raised in these countries, and all countries were on a single gold reserve, then they also began to raise interest rates, thus provoking a reduction in the money supply around the world in 1929. The economy was still growing in most of these countries, but the beginning of the contraction of money had been made, and led to a very powerful contraction in the following years. This applies specifically to 1929, but if we look at the next few years, we can observe Interesting Facts about the money supply in the United States. The monetary base contracted somewhat in 1929, then increased by 1933, the monetary base grew from $7.1 billion to $8.4 billion. But the M2 money supply, which is the base money issued by the central bank and then multiplied by the banking system as it lends to the economy, fell from $26.5 billion to $19 billion because of the massive fall in the multiplier. The factor by which we must multiply the monetary base in order to obtain M2. Why did the multiplier fall? This is evidenced by the last two lines of Table 1, reserves are the reserves of commercial banks in relation to their deposits. A commercial bank is obliged to keep a certain share of deposits in its reserves; according to the law, there are mandatory reserve requirements; it is impossible to issue loans in the amount of all the money invested by the population in the bank, however, banks can hold voluntary additional reserves, and these voluntary reserves have grown very much. Banks stopped lending to industry and stopped lending to the population. We see that the share of deposits that remained in reserves in 1929 was 14%; in 1933, already 21% of all deposits remained in reserves. That is, banks stopped creating money through multiplication, by issuing money on credit, which then turned into a deposit of someone else, then was issued again on credit, thus the banking system multiplies the money supply, turning it into M2. Banks have largely stopped doing this, or rather, they have greatly slowed down lending, but the population is to blame to an even greater extent for this. The ratio of cash on hand - kept not in the bank but in a wallet under the mattress - to bank deposits has risen since 1929 from 17 percent to 41 percent. The population simply stopped trusting the banks, so money was not multiplied through the banking system, because of this the multiplier fell very much, and as a result the M2 money supply fell. All this led to a powerful reduction in the money supply. This was actually the mistake of the monetary authorities.

Milton Friedman said that the central bank provoked a fall in the money supply, but from this he concluded that central banks should be abolished altogether, that a machine should be installed that, instead of the central bank, would add money to the economy at a constant rate. In general, he did not really like the government as such, believing that the smaller the government, the better. On this issue, Paul Krugman argued with him in absentia; he said that Friedman, while right in the main premise, was wrong in his conclusions. We see a fall in the money supply with some growth in the monetary base, that is, a fall in the money multiplier, which is not affected by the Fed. Because the Fed cannot force banks to lend, and the population to bring money to the bank, this is a voluntary decision of commercial banks and the population. The only thing the Fed could do was to compensate for the reduction in the multiplier by massively adding the monetary base to the economy. Add a lot of money to compensate for the fall in the multiplier by correspondingly increasing the monetary base. Krugman believes that the authorities’ mistake was that they did not respond with active action to the events that were taking place in the economy. This does not apply to 1929, but to subsequent years. The conclusion that should have been drawn from Friedman’s absolutely correct postulate, according to Krugman, is precisely that we need a very strong and active Fed, an active central bank that will respond to changes in the multiplier by powerfully adding money to the economy. And the argument is turned on its head, not that the central bank should be banned, but rather that it should be much more active and intervene more actively in the economy. We see that Bernanke is clearly aligned with Krugman by the actions he is now taking.

Let's go back to the gold standard for a while. Friedman's idea that monetary policy caused the Great Depression was not followed by economists for a long time. Friedman was considered a fringe economist with radical views, and most economists paid no attention to his ideas. They returned to his point of view only in the 80s, when they began to study in more detail the reasons for what happened. When they began to study the gold standard, the arguments in favor of precisely this development of events became clear. It is enough to simply compare those countries that left the gold standard earlier, which decided to conduct their own monetary policy rather than fight for gold. For example, Spain, which was not on the gold standard at all, and not being tied to this policy, did not raise interest rates; as a result, during the Great Depression, trade relations in the country were not actually disrupted. Of course, Spain suffered from the Great Depression, but of all European countries she suffered the least. Countries that quickly left the gold standard in 1931 suffered relatively little loss; in these countries, the decline in GDP was much smaller than in those countries that continued to remain on the gold standard. The USA, Italy, Romania, Belgium, which emerged in the period 1932-35, suffered much more. France, Holland, and Poland persisted to the end, continuing to adhere to the gold standard even in 1936; their GDP decline was maximum. A fairly clear pattern is visible: the sooner a country left the gold standard, the less it suffered. This was a powerful argument in favor of Friedman's theory.

This is actually the explanation why, at very low interest rates, banks did not borrow from the Fed and did not give loans. If deflation is 13%, then even with a zero interest rate no one will take out a loan, because they will have to return money that is 13% more expensive than what they took. The nominal interest rate has hit the floor - 0%, and the real interest rate is actually 13%, and no one will borrow at real 13%. This is an important issue of deflation, hence the fear of deflation. Japan has been experiencing this problem for the last ten to fifteen years; inflation there is around zero or slightly less. I would like to lower interest rates to stimulate the economy, but this is impossible to do because it is impossible to lower the nominal interest rate below zero. Deflation has led to an increase in real wages. Especially in the USA, where there was a cartel agreement between large industrialists and Hoover, and since nominal wages did not want to fall, and prices fell, in fact, every year workers were paid more and more money, so industrialists preferred to simply fire workers rather than lower their wages . This led to financial losses for debtors, they had to pay much more money, all this led to disastrous consequences in the economy and stimulated the Great Depression.

Based on these observations, Friedman formulated his paradigm, which is part scientific, part political, since it has to do not only with how the world works, but also with what needs to be done. The main idea is that the real economy is, in principle, internally stable; it does not need any artificial stabilization. The problem in the 30s was not that it was not stimulated enough, but that it was driven into depression by the wrong actions of politicians. The goal of the authorities according to the ideas of early monetarism was that it was simply necessary to increase the money supply at a constant pace and not interfere with anything else. As Friedman wrote, money is like oil in a car engine, too little is bad and too much is bad, you just need to add it as much as you need. A significant portion of macroeconomists, dominated by Keynesians such as Robert Solow and Paul Samuelson, did not accept these ideas until the late 1970s. Here are the origins of the behavior of Ben Bernanke, who carefully studied the Great Depression, and when he became the head of the Federal Reserve, during Milton Friedman's lifetime he apologized for the behavior of the Federal Reserve in 1929.

It is noteworthy that in the United States the same thing is now happening that happened in the early thirties, namely a powerful drop in the multiplier. Since 1996, the multiplier has been absolutely stable at approximately 8.5-9, and at the end of 2008 it unexpectedly dropped very powerfully to 5. As in the early thirties, banks began to hold many additional reserves that they did not hold a year ago, that is banks stopped lending to the economy. As a result, the money multiplier has fallen very much, unless the Fed responds with a very large increase in the monetary base, this will lead to a very large fall in the money supply, just like in the 1930s. But since Bernanke promised Friedman not to do that again, he responded, according to Krugman, as he should have reacted, by greatly increasing the monetary base. Bernanke responded to the fall in the multiplier by increasing the monetary base enough to offset the fall and keep broad money growth at the same level as before. I believe this is one of the most important lessons we learned from the Great Depression.

How does the monetary base increase? The increase in the monetary base is mostly done through open market operations, when the Fed buys US Treasury bonds on the open market, that is, the huge debt that the US government issued at one time circulates on the market in the form of all kinds of bonds, and the Fed simply bought 300 billion of these bonds in order to add a monetary base to the economy. This money, which is added directly to the economy, becomes the money supply M2, which is defined as the sum of all deposits in bank accounts plus money held by the public. Suppose that the central banker adds one hundred rubles to the economy by giving them to some bank, the bank gives these hundred rubles to someone on credit, after which the person who took the loan will pay with these hundred rubles, or put these hundred rubles on another some bill, after which the economy will already have two hundred rubles. The banking system thus multiplies many additional deposits from the population. The result is M2, when we divide this M2 by the monetary base, we get the so-called multiplier. In an ideal case, when the population puts all the money in the bank, and the bank issues all the money that it has the right to lend out, then it can be shown mathematically that this multiplier will be equal to one divided by the reserve ratio. If the reserve ratio is 10%, and the bank must keep 10% in its reserves, then the money multiplier will be equal to one divided by 0.1. In reality, of course, the multiplier turns out to be less than 10. Because not all the money is deposited in banks, and banks do not lend out all the money. In Russia the multiplier is 2.5, in the USA it is 9, although in the USA the reserve rate is 10%. The multiplier may fall if the population stops bringing money to banks, or banks stop issuing loans, which is exactly what has happened now. In Russia, for example, the monetary base was mainly added through the purchase of dollars.

The most bloodthirsty time in macroeconomics was the 70s, when the so-called rational expectations revolution took place. In the late 50s, the so-called Philips curve was discovered. British economist William Phillips decided to draw a graph of the relationship between inflation and unemployment in England for almost the entire 20th century, and saw a very clear negative relationship: in years when there was high inflation, there was low unemployment, when there was low inflation, there was high unemployment. There was some kind of pattern behind this, but this pattern was not immediately understood. Moreover, the pattern, in general, fit quite well into the Keynesian paradigm. By printing additional money, firstly, we increase demand, so unemployment should fall, i.e. the economy produces more, and secondly, prices must rise, so there should be higher inflation and lower unemployment than usual. The conclusion was that the government has a choice: whether we want high inflation or high unemployment. In any case, this is how this dependence was interpreted in the early 70s. US President Richard Nixon, of course, preferred that unemployment be low, like any elected politician. Milton Friedman spoke with a huge amount speeches that this should not be done under any circumstances, this empirical dependence cannot be interpreted in this way. But then no one listened to Friedman. Nixon’s plan was exactly half successful; inflation actually managed to rise, but unemployment could not be lowered.

Since this experiment was carried out, the Philips curve has disappeared from the data, or rather from the data and in the form in which the Philips curve existed before. If we plot inflation against unemployment in the US in the 50s and 60s, we see a very clear negative relationship. If we draw it in the 70s, 80s, 90s, then we will see a cloud in which, in principle, there are no dependencies, neither positive nor negative. In many ways, this connection disappeared due to the fact that they tried to use it, it was confused with some kind of structural dependence in the economy, instead of understanding its nature.

In 1968 two Nobel laureate Milton Friedman and Edmund Phelps, simultaneously and independently of each other, put forward the idea that unemployment has some natural long-term rate. Based on early Keynesian theory, it was believed that by stimulating demand, unemployment could be reduced to anywhere. Phelps and Friedman suggested that it could not be lowered below its natural level, and this natural level maybe not one or two percent, but six percent. Unemployment exists for very structural microeconomic reasons. Firstly, there is so-called frictional unemployment, when people are simply simply looking for work. When they quit one place, they look for another, and this may take up some non-trivial part of the observed unemployment. Secondly, there is stimulating unemployment. Employers not only want to hire workers, they want to force these workers to work better, not to shirk at work, at a minimum, and at a maximum to also work actively. To do this, the employee must be given such a salary that he has something to lose, so that he knows that he cannot quit and find the same job elsewhere, because here he is offered an increase above the equilibrium salary. If all employers do this and everyone pays a premium, then the economy will not be able to hire all the people who want to work at this salary. The equilibrium wage turns out to be higher than what it would have been without this incentive. Unemployment, therefore, turns out to be a useful tool from the employer's point of view. Because there is something to scare the employee, and if there is no unemployment, then the employee dictates the rules. By stimulating aggregate demand, drive unemployment to higher low level It won’t work, because as soon as unemployment falls too low, the employer begins to raise the employee’s salary and fire unnecessary workers. This was the first example of why microeconomics is important in macroeconomics.

The abstract aggregate demand that Keynes talked about all the time was no longer sufficient as an argument. Keynes truly believed that demand could explain everything. Modern point the view that demand can explain a lot, but not everything. Again, the views of Friedman and Phelps are very different. Friedman believed that nothing at all could be explained by demand, while Phelps believed that you just need to present everything correctly. What lessons can be learned from this, according to Friedman and Phelps? Firstly, the so-called classical dichotomy, that in the long run, nominal variables such as money, inflation, prices, they only affect nominal variables. The fact that we added pieces of paper to the economy with the inscription “one hundred rubles” will not change the real variables, but production and unemployment are completely different things, determined by other factors. By printing money in the long run, you can only influence the value of this money in terms of goods, that is, prices, and the real variables in the long run are determined by the supply side. That is, by how much the economy can produce. For example, it is impossible to influence the competitive ability of the economy by stimulating demand. The important point about the Phillips curve is that empirical patterns cannot be used for policy purposes. If you find an empirical pattern, first of all you need to understand its root cause, only then can you understand what can be used and what cannot. The modern interpretation of the Phillips curve makes it possible to use it, we will talk in the third lecture, which will complete the topic of macroeconomics. The Phillips curve is the result of an equilibrium, not a menu of recipes. Negligence towards micro-foundations, ignorance of human behavior, ignorance of the expectations that are built into economics, ignorance of the supply side, all this led to the fact that many economists decided that the Keynesian paradigm, which was the main paradigm in the last few decades, should be completely abandoned .

How to distinguish between long-term and short-term perspectives? I would say that the long-term perspective is the one during which prices adjust, and the short-term perspective is the one during which prices have not yet adjusted. We are talking about several years, the cycle takes, in principle, from one boom to the next, and is usually estimated at about eight years. There really is no single definition, but in the terms we are talking about, the short term is within 5 years. Again, they often overlap, meaning there are short-term fluctuations and long-term growth at the same time. They happen synchronously. The effects of short-term policies can last for several years, and for example, what the central bank of any country does today will no longer matter in five years.

Until the 1970s, monetary policy was not considered a mainstream policy, it was not given much attention, it was conducted irregularly, opaquely and rather unpredictable. The basic fluctuations in demand were erratic, and accordingly the fluctuations in the money supply were erratic and unpredictable. In the 1970s, monetary policy became much more important, much more transparent and predictable. Economic agents began to take it into account when making their decisions.

Keynesian economics experienced its difficulties better times. In the USA, Switzerland, Germany and Japan, the Friedman approach to monetary policy began to be introduced. In practice, the first monetarist in the United States was Paul Volcker, who headed the Fed, and responding to a decade of very high, by American standards, inflation of 12%, sharply slowed down the growth of the money supply, which led to the deepest recession in the United States in the entire post-war period. Similar actions were taken by Margaret Thatcher in Great Britain. Inflation was defeated and the economy began to grow rapidly again, resulting in a great moral victory for the monetarists. This allowed them to say that the Keynesians, with their methods, created high inflation for ten years, and they, albeit through a painful recession, were very quickly able to defeat inflation, and most importantly, that this must be done, thereby ensuring low inflation through low growth of the money supply , and ultimately allowing the economy to boom. Although many believe that the price that was paid for this victory over inflation was excessive.

The famous macroeconomist Olvier Blanchard of the Massachusetts Institute of Technology, who now works as the chief economist of the IMF, in his review of what happened in those years, calls people like Milton Friedman the Mensheviks in that revolution, and the Bolsheviks the supporters of the theory of real economic cycles. Real business cycle theory was developed in the 1980s and is based on the ideas that markets are competitive, equilibrium is reached quickly, and there are no sticky prices. It was believed that the employer would not voluntarily lose money; if profit is maximized at such and such a price, then he would set this price; he would not hold a disequilibrium non-optimal price for a long time. Therefore, models based on the Keynesian assumption that prices are suboptimal are models with stupid agents and, as a result, stupid results are obtained. But a stabilization policy, in general, is not needed. In a sense, they agreed with early monetarism that the optimal policy was laissez-faire, and that price stability should support macroeconomic stability; nothing else really needed to be done. However, it is also wrong to consider them followers of Friedman, because Friedman agreed that demand still influences the economy through the money supply; supporters of the model of rational expectations and economic cycles do not have the money supply in their models at all. They believe that the money supply only affects prices and that monetary policy is practically unnecessary. This raises a very important question. Even though fluctuations in technological progress can explain some sharp accelerations in growth, how can we explain declines, how can we explain recessions, and especially the Great Depression? According to this theory, it turns out that the Great Depression was caused by some powerful technological regression. Yesterday we knew how to produce something, today we forgot. This explanation, naturally, cannot satisfy anyone. However, some very attractive ideas have been proposed within this theory, especially in the last ten years. It took about twenty years to create a methodology for the mathematical solution of all these models; in the 90s, supporters of this theory were much criticized for being too abstract models, yes, they were beautiful and elegant mathematical solutions, but what does life have to do with it, their opponents said. How can the Great Depression be explained by models in which the only source of fluctuation is technological progress? Why this proposal arose, let's interpret technological progress a little more creatively. For example, we know from microeconomics that monopolies produce less than the competitive environment, so if suddenly some strong restriction of competition occurs, then the economy should produce less without any fluctuations in demand. A monopolist produces less than a competitive market, and now let's consider whether there was any increase in monopoly power during the Great Depression. They found a lot of such examples showing that there really was a fairly powerful increase in monopolism, firstly, protectionism, the first reaction of almost all countries was to increase barriers to trade with other countries, limiting imports to support domestic producers. All this immediately led to greater monopolization. In general, in the world, if you do not compete with foreigners, you produce less and sell more expensively; this is a fairly clear reaction in any country to the introduction of duties on foreign cars. By the way, AvtoVAZ, immediately after the introduction of duties on foreign cars, wanted to raise the prices of its cars, that is, this theory fully works in practice in our country. This is quite natural, if you remove a competitor, then you raise the price and reduce production, in turn, the unions become stronger. Workers experience b O greater bargaining power, and they begin to dictate their terms to employers. Thus, Theodore Roosevelt, as President of the United States, purposefully weakened many antitrust laws. In many ways, Roosevelt’s new course was not only about stimulating demand; various programs were launched that, in fact, abolished many of the antitrust laws. Naturally, regulation weakens the manufacturer’s ability to produce, since he is now forced not to produce, but to comply with some regulatory standards that the government comes up with. For example, in England, even before the start of the Great Depression, the working week was shortened, and this reduction working week also had a negative impact on the economy’s ability to produce. All these measures largely limited the aggregate supply.

At the same time, in the 1980s, Keynesian theory began to revive. Edmund Phelps was one of the first to criticize early Keynesianism, but at the same time he said that there was no need to bury these ideas, there was too much cleverness in them. Then his followers John Taylor, then Gregory Mankiw, the same Olivier Blanchard, began to create new models in which they fully accepted the criticism of the 70s. Having said that smart models must be based on microeconomic rationales, the behavior of each macroeconomic agent must be explained. Amorphous aggregate demand no longer satisfied anyone; explanations were needed for how people react not only to what was done today, but also to what will be done tomorrow. All these elements need to be added to the models. But the main two postulates of Keynesianism remained. Firstly, it is wrong to say that prices are absolutely flexible, prices change slowly and they do not respond to changes in demand immediately. Secondly, an important thing that has been preserved in modern version Keynesianism is that the demand side dominates short-term fluctuations. Short-term fluctuations last for periods of up to five years, and recessions that begin to end within eight years are usually caused by the demand side. Although, of course, there are exceptions to the new idea. As I said, expectations are key. In response to the Nixon fiasco, an entire literature was created on the microeconomic rationale for price stickiness. Critics of Keynesianism said in the 70s that models with sticky prices are models of people who walk past five hundred dollar bills and do not pick them up, losing money when they could have made money. Keynesians in the 80s showed that losses from non-optimal prices are not so large; mathematically speaking, they are of the second order of smallness. Therefore, although they have a large effect on the economy, each individual producer loses quite a bit from the fact that its price does not adjust a couple of percent higher to the equilibrium. Profit depends very little on this, it is insensitive in the optimum area and insensitive to price changes, so producers are not very worried that their price is three percent higher than the optimum, and a three percent change in price can lead to a three percent drop in the economy, and this is a very serious recession, so the Keynesians did their research to explain why prices might not adjust. What Keynesians agreed on in practice was that stabilization policy should be monetary. They abandoned the idea that fiscal policy is the best tool for stimulating demand.

For modern Keynesians, stabilization policy is not about stimulating demand as high as possible, but about returning demand to the required line, that is, not only increasing demand when the economy falls below trend in crises, but also reducing demand when the economy exceeds trend, because this considered abnormal overheating of the economy. A situation where the factors of production are overused, that is, the economy should not normally produce that much, so it needs to be cooled by raising interest rates, lowering the money supply in the economy, and bringing it back to trend. We must try to achieve the smoothest possible GDP growth, without fluctuations in either direction, because any upward fluctuation will certainly end in a downward decline. This is the main difference between new Keynesianism and old Keynesianism. In our public debate, it is still believed that Keynesians argue with monetarists, but in my opinion, these disputes have not been going on for a long time. Since the 90s, when the New Keynesians appeared, there are no more disputes between Keynesians and monetarists. New Keynesians proposed a model that collected best models Friedman and the best models of Keynes are together, and now there is no actual topic for the debates that existed in the 60s.

What did the representatives of both sides find in common? Firstly, in the long term, money only affects inflation, almost all economists agree with this. Output is determined in the long term only by the supply side, demand affects only short-term fluctuations, but in the short term money and other changes in demand influence. If you quickly print a lot of money now, this will stimulate demand, but only temporarily, then everything will return back to the original GDP, prices will rise in accordance with the growth of money. Actually, what was the initial disagreement between Keynes and Friedman? The problem was that Keynes did not know how to look further than a year ahead, and Friedman did not know how to look closer than a year ahead. They were simply thinking from different perspectives. One of Keynes's most famous phrases is that in the long run we are all dead, so there is no need to study long term perspective, she's not interesting. Friedman just looked only at the long term, he said that if you print more money, prices will eventually rise, yes, in the short term there will be an effect, but we will not be able to predict it, since it is too complex a thing. We do not understand short-term fluctuations in the economy, we do not know how to model them, we do not know how to predict them, and even more so we do not know how to react to them. Any attempt by politicians to respond to short-term fluctuations, for example, by raising demand or lowering it, will only cause even stronger chatter and further destabilize the economy. Friedman spoke about this in his famous speech 1968. This is too difficult a task, which in practice is impossible, in the end we will increase the money supply either too early, or too late, or by the wrong amount. First, we will collect statistics with a delay of several months, when the recession began but has only just become apparent. Secondly, if we start printing money, then this money will reach real sector in a few more months, as a result, in a year, when the economy has already pulled itself out of the recession and is in a state of recovery, only in a year, finally, will we stimulate this economy with even additional money supply instead of letting it grow quietly according to its trend, thereby driving it above the trend, launching the economy into an additional business cycle. So Friedman was not against the Keynesian assumption that demand affects things in the short run, he was against the prescription of what to do about it. Modern Keynesians and monetarists believe that there is still a role for stabilization monetary policy. This has been proven by practice rather than theory. Many believe that the economic smoothing that has occurred in the last thirty years in the world was due to the active policies of Paul Volcker and then Alan Greenspan, who actively intervened, reducing demand when it was too much, increasing demand when it was too little . Actively intervened by raising or lowering interest rates and trying to stimulate demand. Modern New Keynesians and monetarists recommend stabilizing the economy; their common enemy is the theory of real cycles. Although some kind of truce is also planned there.

It is interesting to note that although there was a consensus that monetary policy is more effective than fiscal policy in stabilizing the economy, we are now seeing a return to fiscal policy around the world. All countries are trying to respond to the drop in demand that occurred as a result of this crisis, with a strong increase in government spending, either or together with tax cuts, that is, deficit stimulation of the economy using budget money. Although five years ago everyone would have said that this should not be done. For example, the previous recession in 2001 was fairly mild, but George W. Bush, newly elected president, wanted to cut taxes to stimulate the economy. And Alan Greenspan, already an authoritative central banker, publicly stated that smoothing cycles is his responsibility, and there is a monetary policy for this. Greenspan agreed with the tax cuts because he is a libertarian who believes that what less state, so much the better, but it has absolutely nothing to do with the recession. You just need to always lower taxes and government spending so that there is less government from the point of view of a libertarian. But a recession must be responded to with monetary policy. But during the current crisis, fiscal policy is back on the agenda. Politicians probably thought that this crisis was so large-scale that it required non-standard methods, it required intervention not only monetary, which was done in large quantities, countries have been adding a lot of money to their economies over the past two years, politicians are really afraid that monetary policy alone will not be enough . There is a fear that giving people money is not enough because they will not spend it and the banks will put the money back into reserves. But if the state orders the construction of a road, then during the construction of the road it will be visible real effect. There is a very wide range of opinions here; supporters of the theory of real economic cycles are categorically against it, believing that budget policy is simply a waste of funds and nothing more, they will build roads in the wrong place and in the wrong place, all this money will simply go nowhere. At the other end of the spectrum of opinions, economists like Paul Krugman, on the contrary, believe that in this situation it is necessary to “build-build-build”, pump in a large number of budget money into the economy, which is the only way to increase demand. Moderate Keynesians like Greg Mankiw believe that we should first use all methods of monetary policy, including unconventional ones, and only then, when we really feel that monetary policy has exhausted its resources, only then proceed with fiscal stimulus.

This is why fiscal policy has fallen out of favor, with many politicians now criticizing both Obama's plan and Olivier Blanchard's recommendations to increase government spending by 3%. Budget policy simply lacks efficiency. Bernanke can instantly change the interest rate, but adding money through government spending is instantly impossible. You need to come up with a project, work it out, pass it through all sorts of expert committees, and then the political process, it is necessary that in State Duma(or the US Congress, or the Parliament of England, or the parliament in any other country) adopted a budget law, we must either amend the budget law, or think about how to include this project for next year. This is a non-operational instrument and is not suitable in purely practical terms, although theoretically it has the same or greater effect than monetary policy. By the way, the same Obama plan is criticized for the fact that, according to the main government spending It will be possible to observe the main effect only in 2010-11; in 2009 it was impossible to do so, even with the ideal passage of this plan through all the complexities of this budget process. Of course, corruption also plays a role here. If you give money to the economy to banks, then they themselves will determine which project is the most effective, and when the government itself begins to spend money in an emergency, then, of course, there are huge risks that the money will simply be spent on meaningless projects, which, in in the end, they will simply become a burden on the economy. If you are using fiscal policy, then lower taxes, give people money and let them decide for themselves what to spend it on. Unfortunately, in Russia in 2009 there was a restrictive monetary and budget policy. Government spending fell and the money supply fell compared to the same period last year. The state did not lower interest rates for a long time, but, on the contrary, increased it.

Some studies show that it is better to lower taxes than to increase spending, for example, Christina Romer, who, as head of President Obama’s Committee of Economic Advisers, proposed increasing government spending and assumed in her plan multipliers that were not at all the same as what she found in real data . She assumed to proceed from a government spending multiplier of 1.7, and from taxes of about one. Blanchard, the IMF's chief economist, responded to the crisis by advising all countries to increase government spending by three percent. This shows that obviously economists themselves do not really trust their own research, they understand that one cannot refer to one academic study, it is just one economic study, which still needs to be confirmed and confirmed by other studies.

In conclusion of the lecture, I would like to once again draw your attention to the fact that it is extremely important to distinguish between long-term equilibrium trends on the supply side and short-term fluctuations in demand. In the next lecture we will study the long-term behavior of the economy, and then in the subsequent lecture, short-term fluctuations around the long-term trend.

Market aggregation carried out in order to identify patterns of functioning each of them, namely: studies of the characteristics formation of supply and demand and the conditions of their equilibrium in each of the markets; definitions equilibrium price and equilibrium quantity based on the relationship between supply and demand; analysis consequences of a change in equilibrium in each of the markets.

Market aggregation makes it possible to highlight three macroeconomic markets:

1) market for goods and services (real market),

2) financial market(financial asset market),

3) market of economic resources

1) Market of goods and services (goods market)

For getting aggregate market of goods and services (goods market) we must abstract (distract) from the entire variety of goods produced by the economy and highlight the most important patterns of the functioning of this market, i.e. patterns of formation of demand and supply of goods and services. The demand for goods and services is presented by all macroeconomic agents, and the supply of goods and services is ensured by companies. The relationship between supply and demand allows us to obtain the equilibrium level of prices for goods and services (price level - P) and the equilibrium volume of their production (real output - Y). The market for goods and services is also called the real market because real assets (real assets) are bought and sold there.

Market of goods and services can be roughly divided into three markets:

- market consumer goods and services;

- investment goods market;

- information and technology market.

Market of consumer goods and services is a market in which goods and services are sold for their final consumption households and the state.

On investment goods market investment goods that are purchased are sold companies to reimburse capital consumed in the production process (depreciation - A) and to expand production (net investment - I net ). The state is also entering the market of investment goods and services, represented by state firms

On information and technology market there is a sale of goods such as information and new technologies that are sold firms, government and households. For example, state buys new technologies for the production of modern military equipment. Households buy information databases or computer programs for entertainment and recreation. Firms buy information and new technology for the successful development of your business.

2) Financial assets market

Financial market (debt market) (financial assets market) is a market where financial assets (money, stocks and bonds) are bought and sold.

An asset is something that has value. Assets are divided into real and financial. Real assets– these are real (material) assets (equipment, buildings, furniture, Appliances and so on.). Financial assets- these are securities. They are divided into:

· monetary(money itself or short-term debt obligations)

· non-monetary(income securities - stocks and bonds that

represent long-term debt obligations).

Money is a financial asset, but it differs from other types of financial assets in that only money can service transactions and is a means of exchange. You can't buy bread at a bakery and give a stock or bond in exchange. Money is a financial asset that is used to make transactions(for purchasing goods and services).

Therefore, the financial market is divided into two segments:

A) money market ( money market) or the market for monetary financial assets.

On money market processes of purchase and sale do not occur (buying money with money is pointless), however, the study of the patterns of functioning of the money market, the formation of demand for money and the supply of money is very important for macroeconomic analysis. The demand for money is presented by all internal macroeconomic agents - households, firms and the state, and the supply of money is ensured by the Central Bank, which has a monopoly right to issue money into circulation. Studying the money market and its equilibrium conditions allows us to obtain the equilibrium interest rate (interest rate - R), which is the “price of money” (price of credit), and the equilibrium value of the money supply (money stock - M), as well as consider the consequences of changes in equilibrium in the money market and its impact on the market for goods and services. The main intermediaries in the money market are banks, which accept deposits and issue loans. The money market can be divided into two markets: national currency market and the foreign exchange market, which is often distinguished separately as currency market.

Currency market (foreign exchange market - FOREX) – is a market in which national monetary units (currencies) are exchanged for each other. different countries(dollars, euros, yen and other currencies are exchanged for each other). The demand for the national currency is presented by foreigners who want to buy goods and (or) securities of another country, and the supply of the national currency is provided by the Central Bank of the country.

As a result of the exchange of one national currency for another (the relationship between supply and demand), its price is formed - the exchange rate ( e - exchange rate).

b) securities market (bonds market) or the market for non-monetary financial assets.

On securities market stocks and bonds are bought and sold. A share is a perpetual security (that is, it does not have a maturity date and exists for as many years as the company that issued it exists), making its buyer a co-owner of this company and providing him with the right to participate in its management and the right to receive income - dividends, the value of which depends on the size of the company's profit. A bond is a fixed-term security (i.e., issued for a certain period - for example, for a year, for 5 years, etc.), the buyer of which is a creditor. The bond does not give its owner the right to manage the company, but it ensures the receipt of a fixed (regardless of the amount of profit) income - interest, and at the time of maturity - the return of the nominal value of the bond. Buyers of securities first of all, are households, who spend their savings to generate income (dividends on stocks and interest on bonds). Sellers (issuers) of shares perform companies, A bonds – companies And state. Firms issue shares and bonds in order to obtain funds to finance their investment expenses and expand production, and state issues bonds to finance government budget deficits.

The securities market can be divided into: primary and secondary securities markets.

Primary market securities - the market on which first issued securities are placed. Its main participants are issuers of securities and investors. Issuers in need of financial resources for investment in fixed and working capital determine the supply of securities on the stock market. Investors looking for a profitable area to apply their capital create demand for securities. It is in the primary market that the mobilization of temporarily free Money and investing them in the economy. But the primary market not only ensures the expansion of accumulation on the scale of the national economy. In the primary market, free funds are distributed among industries and areas of the national economy. The criterion for this placement in conditions market economy serves as income generated by securities. This means that free funds are directed to enterprises, industries and areas of the economy that maximize income. The primary market acts as a means of creating an effective structure of the national economy from the point of view of market criteria, supports the proportionality of the economy in the current this moment profit level for individual enterprises and industries.

Consequently, the primary securities market is the actual regulator of the market economy. It largely determines the size of accumulation and investment in the country, serves as a spontaneous means of maintaining proportionality in the economy, meeting the criterion of profit maximization, and thus determines the pace, scale and efficiency of the national economy. The primary market involves the placement of new issues of securities by issuers. In this case, corporations, the federal government, and municipalities can act as issuers. The importance of these issuers in the market is determined by the state of the economy in the country and general level its development. Chronic deficiency state budgets Most countries determine the predominant role of the state in the securities market.

Buyers of securities can be individual and institutional investors. Moreover, the relationship between them depends both on the level of economic development, the level of savings, and on the state of the credit system. In developed countries, the securities market is dominated by institutional investors. These are commercial banks pension funds, Insurance companies, investment funds, mutual funds, etc. In the United States, the primary market for government newly issued bonds is assigned to 41 companies registered as primary dealers in government securities.

A relatively small share of securities after the initial distribution remains in the portfolios of holders until the maturity of the bonds or for the entire life of the enterprise, if we're talking about about shares. Securities in most cases are purchased to generate income not so much from interest payments, but from resale. Resale of securities takes place on the secondary securities market.

Secondary market securities - a market on which securities are circulated in the form of resale of previously issued ones and in other forms. The main market participants are not issuers and investors, but speculators pursuing the goal of making a profit in the form of exchange rate differences. The content of their activities comes down to the constant purchase and sale of securities. Buying cheaper and selling more expensive is the main motive of their activities.

The secondary market necessarily carries an element of speculation. Since the purpose of activity on it is income in the form of exchange rate differences, and the exchange rate value is formed under the influence of supply and demand, there are many ways to influence the price of securities in the desired direction. As a result, in the secondary market there is permanent redistribution property, which always has one direction - from small owners to large ones.

The migration of capital is carried out in the form of its overflow to places of necessary application and the outflow of capital from those industries and enterprises where there is a surplus. The mechanism of such a movement boils down to the following: the demand for certain goods and services grows, their prices increase, profits from their production grow, and capital flows into these industries, released from those branches of production for which the demand for products is decreasing and which are becoming less profitable.

Thus, the secondary market, unlike the primary market, does not affect the size of investments and savings in the country. It only ensures the constant redistribution of funds already accumulated through the primary market between various economic entities. Since the goal of stock exchange speculators is to obtain maximum income in the form of exchange rate differences, they sell securities of enterprises that have exhausted their opportunities for profit growth and buy securities of promising enterprises and sectors of the economy.

As a result, the functioning of the secondary market ensures the constant restructuring of the economy in order to improve its market efficiency and is as necessary for the existence of the securities market as the primary market.

However, the role of the secondary market is not limited to this. The secondary market ensures the liquidity of securities, the possibility of their sale at an acceptable rate, and thereby creates favorable conditions for their initial placement. The ability to turn securities into the form of cash at any time is a prerequisite for investing in securities, since the source of invested loan capital is temporarily free cash capital and funds that can only be used in accordance with the basic principles of credit.

The secondary securities market, concentrating the supply and demand of circulating securities, forms the equilibrium rate at which sellers agree to sell and buyers agree to buy securities, which is necessary when redistributing loan capital between industries and spheres of the economy, between business entities.

Possibility of resale - important factor taken into account by the investor when purchasing securities on the primary market. The function of the secondary market is to balance the securities market and ensure liquidity. A liquid market is characterized by a small gap between the seller's price and the buyer's price; slight price fluctuations from transaction to transaction. Moreover, market liquidity is higher, the more larger number participants in the sale and the possibility of prompt resale of securities, as well as the higher the percentage of novelty of the securities offered for sale.

The secondary market is divided into two large parts - stock exchange And over-the-counter.

Exchange The securities market is a market for securities, transactions with which and the quotation of which are carried out on stock exchanges.

OTC The securities market is a market for securities, transactions with which and the quotation of which are carried out outside of stock exchanges.

3) Market of economic resources (resource market)

TO economic resources or factors of production include: labor, land, capital, entrepreneurial abilities. Thus, there are material factors of production - land and capital, and immaterial factors of production - labor and entrepreneurial ability. The first three factors are objective in nature. The last factor is entrepreneurial skills – it is difficult to evaluate and measure in any natural or monetary terms, therefore this subjective factor cannot be taken into account in macroeconomic models. Market of economic resources (resource market) represented in macroeconomic models labor market, since the patterns of its functioning (the formation of labor demand and labor supply) make it possible to explain macroeconomic processes, especially in the short term. When studying the labor market, we must abstract ourselves from all various types labor, differences in skill levels and training. Labor demand present companies, A labor supply provide households. Labor market equilibrium allows us to determine the equilibrium quantity of labor (labor force - L) in the economy and the equilibrium price of labor - the rate wages(real wage – W/P). Analysis of disequilibrium in the labor market allows us to identify the causes and forms of unemployment.

Long-term macroeconomic models also examine capital market.

In macroeconomic models, especially those studying the behavior of the economy in the short term, the capital stock is assumed to be fixed, so the capital market is not studied. In models that study the behavior of the economy in the long run, changes in the capital stock occur under the influence of changes in investment expenditures of firms.

However, to understand the state’s resource policy, it is necessary to take into account three markets economic resources: labor market, capital market and land market.

Land market – this is the market natural resources, which include: agricultural land market, mineral deposits market, forest market, market water resources etc.

Identification of macroeconomic agents and macroeconomic markets allows us to establish macroeconomic relationships between them and evaluate these relationships using macroeconomic indicators. Macroeconomic relationships can be studied not only by using macroeconomic indicators that evaluate these relationships in a formalized form. This can also be done using macroeconomic models.