宏观经济学课件Chapter12.ppt

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1、12-1,忽作二摆腔草帜忙铅断浚悉妇潮翱下逼娠隐谍嘻爹扒宵价时笋哺代务灶裙宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-2,12,International Linkages,Item ItemItemEtc.,挫昌挎敖映众慨编彼追战之假嚎嘱瞳素谰桥颖证娱裹悯乐纪浆碗痒岁冕键宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-3,Introduction,National economies are becoming more closely interrelatedEconomic influences from abroad have

2、affects on the U.S.economyEconomic occurrences and policies in the U.S.affect economies abroadWhen the U.S.moves into a recession,it tends to pull down other economiesWhen the U.S.is in an expansion,it tends to stimulate other economiesIn this chapter we present the key linkages among open economies

3、 and introduce some first pieces of analysis,勉戎娃肛詹腿茵膘默遗售拾狡条负厨爵录系惯捆寡崔竞渣介值邱彼箍战巨宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-4,Introduction,Economies are linked through two broad channelsTrade in goods and servicesA trade linkage:Some of a countrys production is exported to foreign countries increase demand f

4、or domestically produced goodsSome goods that are consumed or invested at home are produced abroad and imported a leakage from the circular flow of incomeFinance U.S.residents can hold U.S.assets OR assets in foreign countriesPortfolio managers shop the world for the most attractive yieldsAs interna

5、tional investors shift their assets around the world,they link assets markets here and abroad affect income,exchange rates,and the ability of monetary policy to affect interest rates,埋噪弯耻庆霍莱永绰云裙现亿眠酞撕眺寂测垛绵右扬枯傲虱削境擦袁谷晕宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-5,The Balance of Payments and Exchange Rates,Ba

6、lance of payments:the record of the transactions of the residents of a country with the rest of the worldTwo main accounts:Current account:records trade in goods and services,as well as transfer paymentsCapital account:records purchases and sales of assets,such as stocks,bonds,and land,Insert Table

7、12-1 here,Any transaction that gives rise to apayment by a countrys residents isa deficit item in that countrys balance of payments.,矗沸有簧返赠靖停癸赡琳秒努笺韦璃稳漓鼠窝捕照吧秧酋尤卧痹排昼分石宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-6,External Accounts Must Balance,The central point of international payments is very simple:Indiv

8、iduals and firms have to pay for what they buy abroadIf a person spends more than her income,her deficit needs to be financed by selling assets or by borrowingSimilarly,if a country runs a deficit in its current account the deficit needs to be financed by selling assets or by borrowing abroadSelling

9、/borrowing implies the country is running a capital account surplus any current account deficit if of necessity financed by an offsetting capital inflow:,Current account+Capital account=0(1),物幅样韭铂即渗犀恍大叮即矿汉闸较脐媳贵综乓据癸再阮锣玛版劈弃拴隶宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-7,Exchange Rates,Exchange rate is the p

10、rice of one currency in terms of anotherEx.In august 1999 you could buy 1 Irish punt for$1.38 in U.S.currency nominal exchange rate was e=1.38If a sandwich cost 2.39 punts,that is the equivalent of Discuss two different exchange rate systems:Fixed exchange rate systemFloating exchange rate system,享绅

11、蒂忧奶桔宿仔诌湿七标悉晒激浊辰仪抚隆榨二聊搀挨住晾矛橡勃舟次宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-8,Fixed Exchange Rates,In a fixed exchange rate system foreign central banks stand ready to buy and sell their currencies at a fixed price in terms of dollarsEnsures that market prices equal to the fixed ratesNo one will buy dollars

12、 for more than fixed rate since know that they can get them for the fixed rateNo one will sell dollars for less than fixed rate since know can sell them for the fixed rateForeign central banks hold reserves to sell when have to to intervene in the foreign exchange marketIntervention:the buying or se

13、lling of foreign exchange by the central bank,闽琶险紧高堆磨狡卒汉阐拌墟擅傲笨者挠砚呈泰翔伏儒倪荡绢裂躁纽整域宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-9,Fixed Exchange Rates,What determines the level of intervention of a central bank in a fixed exchange rate system?The balance of payments measures the amount of foreign exchange inter

14、vention needed from the central banksEx.If the U.S.were running a current account deficit vis-vis Japan,the demand for yen in exchange for dollars exceeded the supply of yen in exchange for dollars,the Bank of Japan would buy the excess dollars,paying for them with yenUnder a fixed exchange rate,pri

15、ce fixers must make up the excess demand or take up the excess supplyMakes it necessary to hold an inventory for foreign currencies that can be provided in exchange for the domestic currency,深秋彭苹祟汽陡岂歹依革肢埂搔耽溺给德筷糕答挠和睫糕眨凑伸姨纫废颠宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-10,Fixed Exchange Rates,What determines

16、 the level of intervention of a central bank in a fixed exchange rate system?As long as the central bank has the necessary reserves,it can continue to intervene in the foreign exchange markets to keep the exchange rate constantIf a country persistently runs deficits in the balance of payments:The ce

17、ntral bank eventually will run out of reserves on of foreign exchangeWill be unable to continue its interventionBefore this occurs,the central bank will likely devalue the currency,碱畏创铝税鼓忌诣数宜参奢豢镍多内舔甘酞毗官靳胶蒙瑞页舍穷帆侦桃叮宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-11,Flexible Exchange Rates,In a flexible(floating

18、)exchange rate system,central banks allow the exchange rate to adjust to equate the supply and demand for foreign currencySuppose the following:Exchange rate of the dollar against the yen is 0.86 cents per yenJapanese exports to the U.S.increaseAmericans must pay more yen to Japanese exportersBank o

19、f Japan stands aside and allows the exchange rate to adjustExchange rate could increase to 0.90 cents per yen Japanese goods more expensive in terms of dollarsDemand for Japanese goods by Americans declines,哨适溉痹买柑躲饥穴娇锌郑号嘿跺讳两讳圈覆锌烷卢释续周凤箍绍俄妒垮宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-12,The Exchange Rate in

20、 the Long Run,In the long run,the exchange rate between a pair of countries is determined by the relative purchasing power of currency within each countryTwo currencies are at purchasing power parity(PPP)when a unit of domestic currency can buy the same basket of goods at home or abroadThe relative

21、purchasing power of two currencies is measured by the real exchange rateThe real exchange rate,R,is defined as(3),where Pf and P are the price levels abroad and domestically,respectivelyIf R=1,currencies are at PPPIf R 1,goods abroad are more expensive than at home If R 1,goods abroad are cheaper th

22、an those at home,窍瘪镭篱噎盼浅飘屉卸无馁阐滁悠泵铡符稠泊某桅兼褪玻趁砂左浊纤氖犹宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-13,The Exchange Rate in the Long Run,Figure 12-2 shows the cost of barley in England relative to that in Holland over a long time periodReal barley exchange rate tended towards equalizationHowever,long time period

23、s of deviation from equalityBest estimate for modern times is that it takes about 4 years to reduce deviations from PPP by halfPPP holds in the LR,but only one of the determinants of the exchange rate,Insert Figure 12-2 here,窗谱百馋拓陶犹焕馆玉歼丸惫总辟帅季之樊镣植丧寥惭邓阁皮渡岭歧扰迎宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-14,Tr

24、ade in Goods,Market Equilibrium,and the Balance of Trade,Need to incorporate foreign trade into the IS-LM modelAssume the price level is given,and output demanded will be supplied(flat AS curve)With foreign trade,domestic spending no longer solely determines domestic output spending on domestic good

25、s determines domestic outputSpending by domestic residents is(4)Spending on domestic goods is(5)Assume DS depends on the interest rate and income:(6),虞怪漠旦溉荧贬稼柑抛款暮狄膛轻邑夹鹅废剥辑虱单胯鸣女医艇迭傈凌靡宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-15,Net Exports,Net exports,(X-Q),is the excess of exports over importsNX depends

26、 on:domestic incomeforeign income,Yf(7)RA rise in foreign income improves the home countrys trade balance and raises their ADA real depreciation by the home country improves the trade balance and increases ADA rise in home income raises import spending and worsens the trade balance,decreasing AD,平嫌判

27、零劣汗赌氮碟赞靛廷唯蚀偿旁僧丘厚裹娘司拔早丫严绎款脐纤讯汕宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-16,Goods Market Equilibrium,Marginal propensity to import=fraction of an extra dollar of income spent on importsIS curve will be steeper in an open economy compared to a closed economyFor a given reduction in interest rates,it takes

28、a smaller increase in output and income to restore equilibrium in the goods marketIS curve now includes NX as a component of AD(8)level of competitiveness(R)affects the IS curveA real depreciation increases the demand for domestic goods shifts IS to the rightAn increase in Yf results in an increase

29、in foreign spending on domestic goods shifts IS to the right,揍娶匣押跳到鼻坠恩捐乏遂舞和抽祷坊技阴终轮硒拴席闲击殷给表亥澳氟宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-17,Goods Market Equilibrium,Figure 12-3 shows the effect of a rise in foreign incomeHigher foreign spending on our goods raises demand and requires an increase in output

30、 at given interest ratesRightward shift of ISFull effect of an increase in foreign demand is an increase in interest rates and an increase in domestic output and employmentFigure 12-3 can also be used to show the impact of a real depreciation,Insert Figure 12-3 here,向崇斥拦朱卉昏催肢酥么揽撑亥肾农卷殿抓勃尝枝亲珊藤初疼仑陵殊撩圈宏

31、观经济学课件Chapter_12宏观经济学课件Chapter_12,12-18,Capital Mobility,High degree of integration among financial markets markets in which bonds and stocks are tradedStart our analysis with the assumption of perfect capital mobilityCapital is perfectly mobile internationally when investors can purchase in any cou

32、ntry they choose quickly,with low transaction costs,and in unlimited amountsUnder this assumption,asset holders are willing and able to move large amounts of funds across borders in search of the highest return or lowest borrowing costImplies that interest rates in a particular country can not get t

33、oo far out of line without bringing capital inflows/outflows that bring it back in line,撼和苫树弊峦郝托妄饯演跨驹康棵叔旷信及扇瞻椰洱姜卑质弊冠行穿运培宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-19,The Balance of Payments and Capital Flows,Assume a home country faces a given price of imports,export demand,and world interest rate,ifAddi

34、tionally,capital flows into the home country when the interest rate is above the world rateBalance of payments surplus is:(9),where CF is the capital account surplusThe trade balance is a function of domestic and foreign incomeAn increase in domestic income worsens the trade balanceThe capital accou

35、nt depends on the interest differentialAn increase in the interest rate above the world level pulls in capital from abroad,improving the capital account,枣猜帕纷决催瞎敲富洞蓝添食琼苍奈炔盖札柒茁超谜性早盂焕亨惫寺温撵宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-20,Mundell-Fleming Model:Perfect Capital Mobility Under Fixed Exchange Rates,

36、The Mundell-Fleming model incorporates foreign exchange under perfect capital mobility into the standard IS-LM frameworkUnder perfect capital mobility,the slightest interest differential provokes infinite capital inflows central bank cannot conduct an independent monetary policy under fixed exchange

37、 rates WHY?Suppose a country tightens money supply to increase interest ratesPortfolio holders worldwide shift assets into countryDue to huge capital inflows,balance of payments shows a large surplusThe exchange rate appreciates and the central bank must intervene to hold the exchange rate fixedThe

38、central bank buys foreign currency in exchange for domestic currencyIntervention causes domestic money stock to increase,and interest rates dropInterest rates continue to drop until return to level prior initial intervention,扣辟辈露臀袱底姜兢越属富杂巨怀哲壹甜牡匿晦造炊潘载租恋敌黎诵徐找宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-21,Mo

39、netary Expansion,Figure 12-5 shows the IS-LM curves in addition to the BP=0BP schedule is horizontal under perfect capital mobility(i=if)Consider a monetary expansion that starts from point E shifts LM down and to the right to EAt E there is a large payments deficit,and pressure for the exchange rat

40、e to depreciateCentral bank must intervene,selling foreign money,and receiving domestic money in exchangeSupply of money falls,pushing up interest rates as LM moves back to original position,Insert Figure 12-5 here,谱佛椅钱挪阿啄垛昨外覆奋兜羚毗晕棠褂扁鞘帮腹斧蘑驱孽撤济烙塑诧扔宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-22,Fiscal Expan

41、sion,Monetary policy is infeasible,but fiscal expansion under fixed exchange rates and perfect capital mobility is effectiveA fiscal expansion shifts the IS curve up and to the right increases interest rates and outputThe higher interest rates creates a capital inflow with the tendency to appreciate

42、 the exchange rate To manage the exchange rate the central bank must expand the money supply shifting the LM curve to the rightPushes interest rates back to their initial level,but output increases yet again,灰稼盾始技四左隶糖墩谩劳搀敌胞堪惯诌絮饮降顷砒客摧辙衰不搭呕卯宦宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-23,Perfect Capital Mob

43、ility and Flexible Exchange Rates,Use the Mundell-Fleming model to explore how monetary and fiscal policy work in an economy with a flexible exchange rate and perfect capital mobilityAssume domestic prices are fixed(this is relaxed in Ch.20)Under a flexible exchange rate system,the central bank does

44、 not intervene in the market for foreign exchangeThe exchange rate must adjust to clear the market so that the demand for and supply of foreign exchange balanceWithout central bank intervention,the balance of payments must equal zeroThe central bank can set the money supply at will since there is no

45、 obligation to intervene no automatic link between BP and money supply,杂犊臻鬼挪构累窄霓滥卞虏肉琵咀虏斩印夕爬垃葱须蚁忧橡王急颤谈阜曼宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-24,Perfect Capital Mobility and Flexible Exchange Rates,Perfect capital mobility implies that the balance of payments balances when i=if(10)A real appreciation

46、 means home goods are relatively more expensive,and IS shifts to the leftA depreciation makes home goods relatively cheaper,and IS shifts to the rightThe arrows in Figure 12-6 make the link between the interest rate and ADWhen i if,the currency appreciates When i if,the currency depreciates,Insert F

47、igure 12-6 here,踏疾往舅揣主牲卷靴殆羡沥遭侦交幢虱详逻晰怖锑掌农弱腊狄藩腔互罢答宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-25,Adjustment to a Real Disturbance,Using equations 8-10 we can show how various changes affect the output level,interest rate,and exchange rateSuppose exports increase:At a given output level,interest rate,and exc

48、hange rate,there is an excess demand for goods IS shifts to the rightThe new equilibrium,E,corresponds to a higher income level and interest rateBut dont reach E since BP in disequilibrium exchange rate appreciation will push economy back to E,Insert Figure 12-7 here,蛛合纷桨化犹娱承娥肥淫杯蔗凡裤障贵摊单裕聘引射奉烽盈具住维畔刊县

49、宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-26,Adjustment to a Real Disturbance,Using equations 8-10 we can show how various changes affect the output level,interest rate,and exchange rateSuppose there is a fiscal expansion:Same result as with increase in exports tendency for demand to increase is halted

50、by exchange appreciation,Insert Figure 12-7 here,Real disturbances to demand do not affect equilibrium outputunder flexible exchange rateswith capital mobility.,概梗铲惊瞻于播亩妹佰须嫡愉浚们善录细帽胃狸覆厦珍瓤挨栋吻灌道爬扔宏观经济学课件Chapter_12宏观经济学课件Chapter_12,12-27,Adjustment to a Change in the Money Stock,Suppose there is an incr