October 5, 2015 macro:
I. dynamic scoring: how take generic concept and bring numbers to it
A. tax cut boosts consumption, feed-on effects to investment
B. cf. blog post: how fast does growth offset revenue losses?
i. did previous tax cuts lead to booms?
ii. did previous tax cuts lead to smaller deficits?
II. household consumption model: Franco Modigliani [Nobel Prize] and very similar work by Milton Friedman [ditto]
A. interest rates: income and substitution effects work in opposite direction
i. empirical results: no impact of interest rate changes on savings rates
ii. exception when interacts with home mortgages
B. short-term implication: shocks offset by changes in savings not consumption = no change in GDP.
III. read: what are demographic dividends?