国际贸易与金融II(双语)课程国际经济学13课件.ppt

《国际贸易与金融II(双语)课程国际经济学13课件.ppt》由会员分享，可在线阅读，更多相关《国际贸易与金融II(双语)课程国际经济学13课件.ppt（66页珍藏版）》请在三一办公上搜索。

1、1,International Economics,Lectured by Yuanfen TuSchool of International Trade and Economics Email:,国际经济学,1International Economics Lectu,2,International EconomicsBy Robert J. Carbaugh9th Edition,Chapter 13:Exchange-Rate Determination,2International EconomicsBy Ro,3,Exchange-Rate Determination,Main Co

2、ntents,This chapter seeks to explain the forces that underlie currency appreciation and deprecation under a system of market-determined (floating) exchange rates.,3Exchange-Rate DeterminationMa,4,Exchange-rate determination in a free market,If we are to understand why some currencies depreciate and

3、other appreciate, we must investigate the factors that cause the supply and demand schedules of currencies to change.These factors include market fundamentals (economic variables) and market expectations.,Exchange-Rate Determination,4Exchange-rate determination i,Exchange-Rate Determination,Factors

4、influencing exchange rates,Market fundamentals(市场基本要素）Bilateral trade balancesReal incomeReal interest ratesInflation ratesConsumer preferences for domestic or foreign productsProductivity changes affecting production costsProfitability and riskiness of investments,Exchange-Rate DeterminationFac,Fac

5、tors influencing exchange rates,Market fundamentals (contd)Product availabilityMonetary policy and fiscal policyGovernment trade policyMarket expectations（市场预期）News about future market fundamentalsSpeculative opinion about future exchange rates,Exchange-Rate Determination,Factors influencing exchang

6、e r,When are these factors important?,Short run (days)Dominated by financial transfers responding to:Differences in real interest ratesShifting expectations of future exchange ratesMedium run (months)Primarily influenced by economic cycles,Exchange-Rate Determination,When are these factors importa,W

7、hen are these factors important?,Long run (years)Dominated by movements of goods, services, investment, which are influenced by:Inflation ratesInvestment profitabilityConsumer tastesReal incomeProductivityTrade policyHow these factors interact to affect exchange rates depends on the relative importa

8、nce of trade and financial relations between the countries,Exchange-Rate Determination,When are these factors importa,When are these factors important?,Exchanges rates are determined simultaneously by long-run structural, medium-run cyclical, and short-run speculative forces.There exists some equili

9、brium level or path to which a currency will eventually gravitate.,Exchange-Rate Determination,When are these factors importa,国际贸易与金融II(双语)课程国际经济学13,Factors influencing exchange rates,Real income differentials,A country with faster economic growth than the rest of the world will have a depreciating

10、currency (other things being equal)Imports rise faster than exports, so demand for foreign currency rises faster than its supply,Factors influencing exchange r,Impact of real income differentials,Factors influencing exchange rates,Impact of real income differen,Factors influencing exchange rates,Rea

11、l income differentials,One shouldnt conclude that a strong currency is an indicator of a strong economy.Real income changes can also reflect other processes, which might lead to rising exportsFor example, the rise in real income is due to a supply-side factor-an improvement in the nations productivi

12、ty.,Factors influencing exchange r,Factors influencing exchange rates,Real interest rates,Short term real interest rate differences influence international capital movementsEasy credit, low short term rates lead to less demand for the currency and depreciationTight credit, high rates lead to greater

13、 demand for the currency and appreciation,Factors influencing exchange r,Impact of interest rate differentials,Factors influencing exchange rates,Impact of interest rate differ,Factors influencing exchange rates,Real interest rates,Most experts in international finance agree that interest-rate diffe

14、rentials are a major determinant of exchange rates in the short run.For international investors, it is relative changes in the real interest（实际利率） that matter.,Factors influencing exchange r,Factors influencing exchange rates,Real interest rates,Nominal interest rate（名义利率）refers to the rate of retur

15、n on assets that can be earned in a particular country, not adjusted for the rate of inflation.Real interest rate（实际利率）is the nominal exchange rate adjusted for changes in relative price level.Real interest rate=nominal interest rate-inflation rate,Factors influencing exchange r,Back,Back,Factors in

16、fluencing exchange rates,Real interest rates,Countries that experience relatively low real interest rates tend to find their currencies depreciating.,Factors influencing exchange r,Inflation Rates, Purchasing Power Parity, Long-Run Exchange Rates,Law of one priceAn identical good should cost the sam

17、e in all nations, assuming costless shipping and no barriersTheory: Pursuit of profits and price equalizationSingle price might not apply in practiceBig Mac indexPrimitive and has many flaws but widely understood Serves as an approximation of currency strengthPrice of a Big Mac (Table 12.3),Inflatio

18、n Rates, Purchasing Po,Back,Back,Factors influencing exchange rates,Relative purchasing power parity,When applying the purchasing-power-parity concept, most analyst consider a nations overall inflation (deflation) rate measured by the producer price index or consumer price index.,Factors influencing

19、 exchange r,Purchasing Power Parity,Purchasing power parity theoryExchange rates are related to differences in the level of prices between two countriesChanges in relative national price levels determine changes in exchange rates over the long runGiven in symbols as:Application of the concept (Table

20、 12.4),Purchasing Power ParityPurchas,Back,Back,Impact of inflation rate differentials,Factors influencing exchange rates,Impact of inflation rate diffe,Purchasing Power Parity,Limitations of the theoryOverlooks the fact that exchange-rate movements may be influenced by investment flowsChoosing the

21、appropriate price index Determining the equilibrium period baseGovernment policy interferencePredictive power most evident in the long runPurchasing power parity: U.S.-United Kingdom (Figure 12.3),Continued,Purchasing Power ParityLimitat,Back,Back,Factors influencing exchange rates,Relative purchasi

22、ng power parity,Evidence concerning the validity of the purchasing-power-parity theory is mixed.The purchasing-power-parity theory also doesnt appear to hold as well when tests are conducted over relatively short time period.Over a sufficiently long period it is possible that economic forces work to

23、 maintain purchasing-power-parity levels.,Factors influencing exchange r,Factors influencing exchange rates,Other market fundamentals,Bilateral trade relationshipsConsumer TastesInvestment ProfitabilityProduct AvailabilityProductivity ChangesTrade Policy,Factors influencing exchange r,Market Fundame

24、nts and Dollars Exchange Value,Exchange-Rate Determination,Market Fundaments and Dollars,Market Fundaments and Dollars Exchange Value,Exchange-Rate Determination,Market Fundaments and Dollars,Factors influencing exchange rates,Market expectations,Fluctuations in exchange rates are sometimes too larg

25、e and too sudden to be explained by market fundamental, they are subject to market expectations, that is to say rates can move in anticipation of future changes.,Factors influencing exchange r,Factors influencing exchange rates,Market expectations,Like stocks, foreign exchange rate react quickly to

26、news or even rumors that point to future changes affecting rates.,Factors influencing exchange r,Market expectations and Exchange-Rate Fluctuations,Unanticipated rise in the growth of the U.S money supply occurs,Market expectations and Exchan,Factors influencing exchange rates,Market expectations,Fu

27、ture expectations can be self-fulfilling. The exchange rate is also effected by speculative bubbles（投机泡沫）, which can start without any real information but can become self sustaining for a while.,Factors influencing exchange r,Factors influencing exchange rates,Market expectations,Factors influencin

28、g exchange r,Factors influencing exchange rates,Interaction of exchange rate determinants,Whether the home currency will rise or fall against the foreign currency depends on the nature of the international transactions between the two countriesInvestment interest rateInternational trade real income

29、and inflation,Factors influencing exchange r,Factors influencing exchange rates,The federal reserve and the Monetary approach to exchange-rate determination,Monetary approach（货币分析法） was put forward by J.Frenkel（弗兰克尔）、M.Mussa（穆萨）et al in 1970s. Monetary approach sees exchange rates as determined by t

30、he free-market responses to changes in the total demands and supplies of national currencies.,Factors influencing exchange r,Factors influencing exchange rates,The federal reserve and the Monetary approach to exchange-rate determination,They emphasizes the fact that the foreign-exchange markets is a

31、 monetary phenomenon, where monies are traded for monies. Exchange-rate is the relative price between the currencies in two countries, not the relative price between the commodities.(汇率是两国货币的相对价格，而不是两国商品的相对价格),Factors influencing exchange r,Factors influencing exchange rates,The federal reserve and

32、the Monetary approach to exchange-rate determination,Assumptions:Aggregate supply curve is vertical (垂直的总供给曲线), which means wage is flexible, price is also flexible and the variations of price wont effect the output.The demand for money is steady（稳定的货币需求）The theory of PPP is tenable（购买力平价的成立）,Factor

33、s influencing exchange r,Factors influencing exchange rates,The federal reserve and the Monetary approach to exchange-rate determination,The aggregate demand for money in a nation depends on the level of Real income Prices Interest rates Md=P L (i，Y) Md/P= L (i，Y) Money supplies can be controlled by

34、 central banks.,Factors influencing exchange r,Factors influencing exchange rates,The federal reserve and the Monetary approach to exchange-rate determination,When in equilibrium : Ms=Md Ms/P= L (i，Y) In PPP theorySo:,Factors influencing exchange r,Factors influencing exchange rates,The federal rese

35、rve and the Monetary approach to exchange-rate determination,The quantity of money supplied is predicted not to influence the amount of output, (real) interest rates, and the aggregate demand of real monetary assets L(i,Y).However, the quantity of money supplied is predicted to make the level of ave

36、rage prices adjust proportionally.The equilibrium condition Ms/P = L(i,Y) shows that P is predicted to adjust proportionally when Ms adjusts, because L(i,Y) does not change.,Factors influencing exchange r,Factors influencing exchange rates,The federal reserve and the Monetary approach to exchange-ra

37、te determination,Price is completely flexible. We call it flexible price monetary approach.（弹性价格货币分析法）,Factors influencing exchange r,Factors influencing exchange rates,The federal reserve and the Monetary approach to exchange-rate determination,It emphasizes that movements in currency values play a

38、 primary role in restoring equilibrium between money demand and money supply.,Factors influencing exchange r,Factors influencing exchange rates,The federal reserve and the Monetary approach to exchange-rate determination,ShortcomingsIt offers only a partial view of the forces influencing exchange ra

39、tes, ignoring nonmonetary assets It is controversial that price is completely flexibleIt is based on PPP, so if the PPP is untenable, its creditability will be doubtful,Factors influencing exchange r,Factors influencing exchange rates,The federal reserve and the Monetary approach to exchange-rate de

40、termination,It is helpful to predict the changes of exchange-rate in the long term.It highlights the importance of monetary policy in influencing exchange rates, and correctly warns that excessive monetary expansion leads to currency depreciation.,Factors influencing exchange r,Factors influencing e

41、xchange rates,Exchange-rate overshooting,The Overshooting Model or Exchange rate overshooting（汇率超调）, first established by economist Rudi Dornbusch（多恩布什）in 1976, is referred to sticky price monetary approach（粘性价格货币分析法）,Factors influencing exchange r,Factors influencing exchange rates,Exchange-rate ov

42、ershooting,Overshooting is an instance of an exchange rates short-run response to a change in market fundamentals is greater than its long-run response.It is an important phenomenon because it helps explain why exchange rates depreciate or appreciate so sharply from day to day.,Factors influencing e

43、xchange r,Short, long run equilibrium: overshooting,Exchange rate markets,Short, long run equilibrium: o,Factors influencing exchange rates,Exchange-rate overshooting,Overshooting can be explained byThe tendency of elasticity to be smaller in the short run than in the long run.Exchange rates tend to

44、 be more flexible than many other prices.,Factors influencing exchange r,52,Factors influencing exchange rates,Exchange-rate overshooting,52Factors influencing exchange,Factors influencing exchange rates,Exchange-rate overshooting,The Overshooting Model or Exchange rate overshooting（汇率超调）first invol

45、ved the dynamic adjustments of exchange rate, after that an important branch of exchange rate theory Exchange Rate dynamics （汇率动态学）was established.,Factors influencing exchange r,Factors influencing exchange rates,Financial assets as determinants of exchange rates,Capital flows have become more impo

46、rtant than trade in determining exchange rates.Only 1 to 2 percent of all foreign-exchange transactions are related to the financing of exports and imports.Decisions to hold foreign or domestic financial assets play a much greater role in the determination of exchange rates than the demand for impor

47、ts and exports does.,Factors influencing exchange r,Factors influencing exchange rates,Financial assets as determinants of exchange rates,The asset-market approach（资产市场分析法）,or asset portfolio balance approach （资产组合平衡法）is a method of determining short-run exchange rates where investors consider two k

48、ey factors when deciding between domestic and foreign investment-relative levels of interest rates and expected changes in the exchange rate itself over the term of the investment.,Factors influencing exchange r,Factors influencing exchange rates,Asset-market Approach,W=M+B+rFThe asset-markets appro

49、ach assumes that domestic and foreign bonds are not perfect substitutes.Investors balance their portfolios among domestic money, domestic bonds, and foreign-currency bonds.They modify their portfolios as conditions change.,Factors influencing exchange r,Factors influencing exchange rates,Asset-marke

50、t Approach,In the process of equilibrating the demand for, and supply of financial assets in each country that determinants the exchange rate.Factors influenced the investors portfolioThe holders wealth and tastesThe level of domestic and foreign interest ratesExpectations of future inflation,Factor