宏观经济学教学课件chapter20.ppt

20-1,循演美聋橙裔瑰三苟绝狰皇基丈啪疑蛾现拈篡紫早搔赠居媳邑脉雅驹俊狸宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-2,20,International Adjustment and Interdependence,Item ItemItemEtc.,鸣货聚苏版植扇怨咨沤别层伊钾荐扳枷射锡扎聋敬璃杆斌打绣呸迂雹缉公宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-3,Introduction,Countries are interdependentBooms or recessions in one country spill over to other countries through trade flowsChanges in interest rates in any major country cause immediate exchange or interest rate movements in other countriesIn this chapter we explore the issues of international interdependence further:Mechanisms through which a country with a fixed exchange rate adjusts to balance of payments problemsAspects of behavior of the current flexible exchange rate system,剖奶芝盟村涨痹卸啊并拟浦简同勒哈船凡盘捉怖伯师踊乾排掌厚御旦悸闭宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-4,Adjustment Under Fixed Exchange Rates,Adjustment to a balance-of-payments problem can be achieved in two ways:Change in economic policyMonetary policyFiscal policyTariffsDevaluations Automatic adjustment mechanismsMoney supply spendingUnemployment wages and prices competitiveness,透盈铣宁咆咬灭弘叼扑袭又铸驯嘱衫凸虏伐暑精蕉姨顶椒油烹假揪冯纠臂宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-5,The Role of Prices in the Open Economy,The real exchange rate is expressed as:(1)assume that exchange rate and foreign prices are givenHow does the openness of the economy affect the aggregate demand curve?An increase in the price level reduces demandHigher price level implies lower real balances,higher interest rates,and reduced spending Given the exchange rate,our goods are more expensive to foreigners and their goods are relatively cheaper for us to buy exports decrease and imports increase,忠蕉咖醛锋翅修绦嘘唁卑轩镇序殷拢层焕爹使呻浑疼箱肉渍每顷膛谎烘菇宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-6,The Role of Prices in the Open Economy,Figure 20-1 shows the downward sloping AD curve where and the NX=0 curve At point E the home country has a trade deficitTo achieve trade balance equilibrium,we would have toBecome more competitive(exporting more and importing less)Reduce our level of income in order to reduce import spending,Insert Figure 20-1 here,互泉久矿簇撤尧箍畅喊则沛聪孺石棒掐霓邹靖吉脉姑糟耳怜莽咳聂最屋更宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-7,The Role of Prices in the Open Economy,What should the country do?The central bank could use its reserves to finance temporary imbalances of paymentsCan borrow foreign currencies abroadMay be troublesome if the countrys ability to repay the debt is in questionCountry must find a way of adjusting the deficitCannot maintain and finance current account deficits indefinitely or for long periods of time,Insert Figure 20-1 here,浅梭淖脚廷鸯寇苗泅卿甜牢迁但涛绵酉激耍纷去捞官斌糠火参烘铣簧恋斯宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-8,The Role of Prices in the Open Economy,Automatic adjustmentWhen the central bank sells foreign exchange,it reduces domestic high powered money and the money stockThe deficit at E implies the central bank is pegging the exchange rate,selling foreign exchange to keep the exchange rate from depreciatingOver time the AD schedule,which is drawn for a given money supply,will be shifting downward and to the left,Insert Figure 20-1 here,谋吁妓舱獭尺六湖埠屯份惹棺何丸登警咋汰气跺处控拣占景贸搀莆叔缸宣宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-9,The Role of Prices in the Open Economy,Automatic adjustmentPoint E is also a point of unemploymentUnemployment leads to declines in wages and costsOver time,the SR equilibrium point,E,moves downward as the AS and AD shiftProcess continues until reach point EPoint E is a LR equilibrium point and there is no need for exchange market equilibrium automatic adjustment,Insert Figure 20-1 here,裔缓俺圾屉继耪稗磺潘魁员厂么嘛拓辕枫护宴兹骡于健垄码甭求维幅栓买宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-10,Policies to Restore Balance,The classical adjustment process may take time alternative is policies to restore external balanceBecause of their side effects,policies to restore external balance must generally be combined with policies to achieve full employmentPolicies to create employment will typically worsen the external balancePolicies to create a trade surplus will affect employment,Necessary to combine expenditure-switching policies,which shift demand between domestic and imported goods,and expenditure-reducing/increasing policies in order to cope with the two targets of internal balance and external balance.,层拍揪痉齐蛮牡和滔退盔浦凭毡氧宾字炔滁莎蚀阜虞驹唁复健颅蝶肖勘苦宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-11,Policies to Restore Balance,Can use policies to reduce aggregate demand expenditure reducing policiesThe trade deficit is expressed as(2)A balance-of-trade deficit can be reduced by reducing spending(C+I+G)relative to income through restrictive monetary and/or fiscal policyThe link between the external deficit and budget deficits is shown in equation(2a):(2a)If S and I are constant,changes in the budget would translate one for one into changes in the external balance Budget cutting would bring about equal changes in the external deficit but budget cutting will affect S and I,thus need a more complete model to explain how budget cuts affect external balance,驼主迁跨沿斜炭索峙浆孙讫迪鲍囤瓮性美耸骤教炬讣李霍场液遵作汐被嵌宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-12,Devaluation,The unemployment that accompanies automatic adjustment suggests the need for an alternative policy for restoring internal and external balanceThe major policy instrument for dealing with payment deficits is devaluation=an increase in the domestic currency price of foreign exchangeGiven the nominal prices in the two countries,devaluation:Increases the relative price of imported goods in the devaluing countryReduces the relative price of exports from the devaluing country,Devaluation is primarily an expenditure switching policy.,芽颈蚜剐琳系骂巷扯押蔫仍谱藉署庭噎泽崭左首萍麻怜符表辆抬隧裙靶邑宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-13,Exchange Rates and Prices,The price level typically changes with the exchange rate(including after a devaluation)The essential issue when a country devalues is whether it can achieve a real devaluationA real devaluation occurs when it reduces the price of the countrys own goods relative to the price of foreign goodsUsing the definition of the real exchange rate:A real devaluation occurs when e/P rises or when the exchange rate increases by more than the price level,宴嚼怎语辊腮房畴党赔婿日琉番慑寨妄落廓辜渤朴髓颐皖挫织削惦鸳涕费宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-14,The Monetary Approach to the Balance of Payments,There is a link between the money supply and the external balance the adjustment process must ultimately lead to the right money stock so that external payments will be in balanceThe only way the adjustment process can be suspended is through sterilization operationsCentral banks frequently offset the impact of foreign exchange market intervention on the money supply through OMOA deficit country that is selling foreign exchange and correspondingly reducing its money supply may offset this reduction by open market purchases of bonds that restore the money supplyPersistent deficits are possible CB actively maintaining the stock of money too high for external balance,STERILIZATION,STERILIZATION,痔傅衣兢址哨涧亦组宽痊分冈擒繁羌唉品呸哪篓忆虐迁斩出颗责狠翱湘验宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-15,Interest Differentials and Exchange Rate Expectations,In our model of exchange rate determination international capital mobility was assumedWhen capital markets are sufficiently integrated,we expect interest rates to be equated across countriesFigure 20-9 shows the U.S.federal funds rate and the money market rate in GermanyThese rates are not equal,Insert Figure 20-9 here,How do we square this fact with our theory?,世群蜜稻肌疽和堡中帖赤在朵瞩杀倾龚膊平墙撮桥泵请屈净彬塔窿撮识虱宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-16,Exchange Rate Expectations,Have assumed that capital flows internationally in response to nominal interest differentialsTheory is incomplete when exchange rates can and are expected to changeMust extend our analysis to incorporate expectations of exchange rate changesTotal return on foreign bonds measured in our currency is the interest rate on the foreign currency plus whatever earned from the appreciation of the foreign currency,OR(5),垒徊礼棉云揖惭顷当监芯嗣喀握缝审程帜撑炬勉拒懊憎览赏浴缉主厦戴卢宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-17,Exchange Rate Expectations,Investor does not know at the time of investment how much the exchange rate will changeThe term should be interpreted as the expected change in the exchange rateThe balance of payments equation needs to be modifiedNet capital flows are governed by the difference between our interest rate and the foreign rate adjusted for expected depreciation:The balance of payments equation is:(6),锡岗糯嚏姓帆芝荆碉恶侗蜘遏蜡渠勺狗樱毒看润拭汛跌崎购乌兆爆罗显俄宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,20-18,Exchange Rate Expectations,The adjustment for exchange rate expectations thus accounts for international differences in interest rates that persist even when capital is freely mobile among countriesWhen capital is completely mobile,we expect interest rates to be equalized,after adjusting for expected depreciation:(6a)Expected depreciation helps account for differences in interest rates among low and high-inflation countriesWhen inflation in a country is high,its exchange rate is expected to depreciate and nominal interest rates will be high,再义犊翼满辜呢胡挝秋蚊雄患埃忆困宛炼角畏尤许哭采倚跃挚舱细硫拣皱宏观经济学教学课件chapter_20宏观经济学教学课件chapter_20,