国际货币与金融经济学课件12

《国际货币与金融经济学课件12》由会员分享，可在线阅读，更多相关《国际货币与金融经济学课件12（13页珍藏版）》请在装配图网上搜索。

1、Chapter 12: Economic Policy with Floating Exchange RatesI. Chapter OverviewChapter 12 continues to use the open economy IS-LM-BP model that was first introduced in chapter 10 to examine the consequences of monetary and fiscal policy on internal and external policy objectives. In contrast to chapter

2、11, which investigated the model under fixed nominal exchange rates, the current chapter considers the case in which nominal exchange rates are permitted to float freely.Following the pattern of the previous chapter, chapter 12 begins by examining monetary and fiscal policies under floating exchange

3、 rates for the case in which capital is imperfectly mobile. The relative effectiveness of the two policies is reversed as compared to the case with fixed exchange rates, so that monetary policy is relatively effective in this environment. In contrast to the fixed-exchange-rate case, sterilization is

4、 no longer a central issue. For fiscal policy, the extent to which there is a slight short run impact on income declines as capital mobility increases, and goes away entirely when capital is perfectly mobile.As in the previous chapter, the two-country model under floating exchange rates with perfect

5、 capital mobility is presented next. For floating exchange rates, the chapter shows that the results of the previous chapter are reversed in that now monetary policy has a potential for a beggar-thy-neighbor effect, whereby foreign income falls as domestic income rises. Instead, under floating rates

6、, fiscal policy now becomes the policy that tends to generate locomotive effects, so that foreign incomes rise in sync with domestic incomes in response to expansionary fiscal policy.The chapter ends with a discussion of the choice between fixed versus flexible exchange rate systems. The text makes

7、a distinction between economic stability versus economic efficiency, and defines the more efficient system as the one that permits residents of a nation to direct resources to their alternative uses at minimum costs. The chapter indicates that floating rates incur an inefficiency due to the fact tha

8、t agents must devote resources to hedging against foreign exchange market risks, while fixed rates have the potential to induce significant risks of unhedged losses stemming from unanticipated currency devaluations brought on by government policy actions. With respect to economic stability, fixed ex

9、change rates have the greater potential to induce income instability in the presence of variations in aggregate desired expenditure, whereas floating exchange rates have the greater potential to induce income instability in the presence of variations in the demand for real money balances.II. Outline

10、A. Flexible Exchange Rates and Imperfect Capital Mobility1. The Effects of Exchange-Rate Variations in the IS-LM-BP Modela. Exchange-Rate Variations and the IS Scheduleb. Exchange-Rate Variations and the BP Schedule2. Monetary Policy under Floating Exchange Rates3. Fiscal Policy under Floating Excha

11、nge Ratesa. The Case of Low Capital Mobility b. The Case of High Capital MobilityB. Floating Exchange Rates and Perfect Capital Mobility1. Economic Policies with Perfect Capital Mobility and a Floating Exchange Rate: The Small Open Economya. Monetary Policy with Perfect Capital Mobility and a Floati

12、ng Exchange Rateb. Fiscal Policy with Perfect Capital Mobility and a Floating Exchange Ratec. Perfect Capital Mobility and Fixed versus Floating Exchange Rates 2. Economic Policies with Perfect Capital Mobility and a Floating Exchange Rate: A Two-Country Examplea. The Effects of a Domestic Monetary

13、Expansionb. The Effects of a Foreign Monetary Expansionc. The Effects of a Domestic Fiscal Expansiond. The Effects of a Foreign Fiscal ExpansionC. Fixed versus Floating Exchange Rates1. Efficiency Arguments for Fixed versus Floating Exchange Ratesa. Social Costs Stemming from Foreign Exchange Risksb

14、. Efficiency via a Fixed Exchange Rate?c. The Pain of Realigning2. Stability Arguments for Fixed versus Floating Exchange Ratesa. Autonomous Expenditure Volatility and Fixed versus Floating Exchange Ratesb. Financial Volatility and Fixed versus Floating Exchange Ratesc. The Stability Trade-Off3. Mon

15、etary Policy Autonomy and Fixed versus Floating Exchange RatesD. SummaryIII. Fundamental Issues1. How do monetary and fiscal policy actions affect a nations real income under floating exchange rates?2. How does the perfect capital mobility influence the relative effectiveness of monetary and fiscal

16、policy actions in a small open economy that permits its exchange rates to float?3. In a two-country setting with a floating exchange rate, to what extent can policy actions in one nation influence economic activity in the other nation?4. What is the basic economic efficiency trade-off faced in choos

17、ing between fixed and floating exchange rates?5. How does the choice between fixed and floating exchange rates depend in part on its implications for economic stability and monetary policy autonomy?IV. Chapter Features1. Management Notebook: Doest the Verifiability Problem of Intermediate Exchange-R

18、ate Systems Make Them Infeasible?This notebook discusses a hypothesis indicating that exchange-rate systems between pure pegs and pure floats ultimately may be infeasible. Whereas individuals and businesses can readily verify whether a central banks policies are consistent with either a pure peg or

19、a pure float, they have a much greater time determining whether a central banks policies are consistent with intended exchange-rate stability or volatility in intermediate regimes. Thus, intermediate systems may be more likely to experience speculative attacks that result in breakdowns in such syste

20、ms.For Critical Analysis: A key way to reduce the scope of the verifiability problem would be for policymakers wishing to implement intermediate exchange-rate regimes to be to publicize all policy actions and explain how those actions are consistent with the intermediate regime they desire to mainta

21、in. 2. Policy Notebook: Would Imposing a Tobin Tax Reduce Exchange-Rate Volatility?This notebook examines a special tax on foreign exchange market trading first proposed by the late James Tobin. His original proposal was designed to assist in maintaining a system of fixed exchange rates, but recent

22、versions of the proposal have been intended to increase the efficiency of a floating-exchange-rate system by giving so-called “noise traders”traders who engage in transactions when any new information arises whether or not it is relevant informationless incentive to engage in currency transactions.

23、For Critical Analysis: The Tobin tax would be a source of additional revenues that governments could use to replace or supplement existing tax collections.V. Answers to End of Chapter Questions1. A currency depreciation leads to a rise in exports. To maintain a balance-of-payment equilibrium, the no

24、minal interest rate must decline, to induce an inflow of financial asset, or real income must rise, to induce a rise in imports. Consequently, the BP schedule, or set of interest rate-real income combinations that yield balance-of-payments equilibrium, must lie down and to the right of its previous

25、position following a depreciation of the home currency.2. An expansionary fiscal policy action, such as an increase in government expenditures, shifts the IS schedule rightward along the LM schedule, inducing a rise in equilibrium real income and spurring import spending. Because capital is perfectl

26、y immobile, this unambiguously causes a balance-of-payments deficit, which result is a rightward shift of the BP schedule to a crossing point at the final IS-LM equilibrium, with a higher level of real income.3. The IS schedule shifts to the left as government spending falls. Given the low capital m

27、obility, there will likely be a private balance-of-payments surplus, resulting in a currency appreciation. Net exports consequently will fall which serves to shift the IS schedule further to the left at the same time as the BP schedule shifts to the left. As a result, the equilibrium interest rate a

28、nd income level both fall.4. The contractionary monetary policy shifts the LM schedule up. Given high capital mobility, this will likely lead to a private balance-of-payments surplus. Thus, the currency will appreciate which will shift the BP line up and the IS schedule left. Thus, income falls and

29、the interest rate rises. 5. As foreign government spending contracts, the foreign IS schedule shifts left. this results in lower foreign income and interest rates. Capital will flow from the foreign economy to the domestic economy, which puts pressure on the foreign currency to lose value. As a resu

30、lt, domestic exports fall and imports rise (i.e., the domestic IS schedule shifts left) while at the same time foreign exports rise and imports fall (foreign IS shifts right). At the same time, the private balance of payments line shifts down such that each economy is in equilibrium at lower interes

31、t rates and lower income levels.6. As the domestic government spending falls, the domestic IS schedule shifts left. As a result, domestic income and interest rates fall. There is a capital outflow to the foreign economy and consequently the domestic currency loses value. Net exports rise in the dome

32、stic economy and net exports fall in the foreign economy. Thus, the domestic IS schedule shifts partially back to the right and the foreign IS schedule shifts to the left. 7. A rise in Japanese government spending and a Japanese tax cut would have caused the Japanese IS schedule to shift to the righ

33、t, driving up Japans nominal interest rate. This would have induced a capital inflow into Japan, which with near-perfect capital mobility would have caused Japan to experience a balance-of-payments surplus, resulting in a rise in the value of the yen. This, along with the rise in Japanese real incom

34、e that would have resulted, would have induced Japanese residents to purchase more U.S. export goods, causing the U.S. IS schedule to shift rightward, thereby pushing the U.S. interest rate upward and expanding equilibrium U.S. real income. Hence, this request was in the interest of the United State

35、s if its goal was to raise its own real income level.8. An expansionary monetary policy action in Japan would have raised equilibrium real income but would have led to a depreciation of the yen. If the effect of higher real income on Japanese spending on U.S. export goods would have been greater tha

36、n the negative effect on such spending of the lower value of the yen, then this policy action also would have been advantageous for the United States.9. As discussed in this chapter, fixing exchange rates does not eliminate the potential for risks resulting from devaluations or revaluations. The fac

37、t that so many realignments occurred indicates that individuals and firms would have continued to face this type of risk in a Western European regime of fixed exchange rates.10. Variability in government spending causes the IS schedule to shift to the right or left. Under a fixed exchange rate, unst

38、erilized monetary interventions to stabilize the exchange rate ultimately induce LM shifts that reinforce the real-income effects of IS variations. Under a floating exchange rate, however, movements in the exchange rate cause net export expenditures to move in the opposite directions from variations

39、 in government spending, which automatically tends to stabilize the IS schedules position. Thus, in this situation in which money demand is relatively stable, a floating exchange rate is more consistent, as compared with a fixed exchange rate, with real-income stability.VI. Multiple Choice Questions

40、1. An appreciation in the value of a nations currency induces a A. leftward shift in the IS schedule.B. rightward shift in the IS schedule.C. leftward shift in the LM schedule.D. rightward shift in the LM schedule. Answer: A2. How does a currency depreciation affect the countrys BP schedule?A. The B

41、P schedule shifts to the left.B. The BP schedule becomes steeper.C. The BP schedule shifts to the right.D. The BP schedule becomes more shallow. Answer: C3. Under floating exchange rates, an expansionary monetary policyA. induces a leftward shift in the BP schedule.B. has its effect on real incomes

42、reduced by subsequent shift in the IS schedule.C. is completely ineffective because of offsetting movements in the LM schedule.D. has its effect on real income magnified by a subsequent shift in the IS schedule. Answer: D4. Under floating exchange rates and high capital mobility, the effects of a fi

43、scal expansion on real income areA. magnified by a shift in the LM schedule.B. reduced by a shift in the LM schedule.C. magnified by a shift in the BP schedule.D. reduced by a shift in the BP schedule. Answer: D5. Under floating exchange rates and low capital mobility, the effects of a fiscal expans

44、ion on real income areA. magnified by a shift in the LM schedule.B. reduced by a shift in the LM schedule.C. magnified by a shift in the BP schedule.D. reduced by a shift in the BP schedule. Answer: C6. When exchange rates are allowed to float, the initial impact of a fiscal policy expansion isA. a

45、decrease in the interest rate, an increase in income, capital inflows and a decrease in net exports.B. an increase in the interest rate, an increase in income, capital inflows and a decrease in net exports.C. a decrease in the interest rate, an increase in income, capital outflows and an increase in

46、 net exports.D. an increase in the interest rate, an increase in income, capital outflows and an increase in net exports. Answer: B7. In a small open economy with perfect capital mobility, the effects of an expansionary monetary policy on real income areA. offset by responses to subsequent exchange

47、rate movements.B. magnified by responses to subsequent exchange rate movements.C. unaffected by responses to subsequent exchange rate movements.D. uncertain without more information on the relative slope of the BP schedule. Answer: B8. In a small open economy with perfect capital mobility, the effec

48、ts of an expansionary fiscal policy on real income are:A. offset by responses to subsequent exchange rate movements.B. magnified by responses to subsequent exchange rate movements.C. unaffected by responses to subsequent exchange rate movements.D. uncertain without more information on the relative s

49、lope of the BP schedule. Answer: A9. In a small open economy with perfect capital mobility, which of the following statements is true?A. Monetary policy is less effective with floating exchange rates than it is with fixed exchange rates.B. Monetary policy is more effective with floating exchange rat

50、es than it is with fixed exchange rates.C. Both monetary and fiscal policy are more effective with fixed exchange rates than with floating exchange rates.D. Both monetary and fiscal policy are more effective with floating exchange rates than with fixed exchange rates. Answer: B10. In a small open ec

51、onomy with perfect capital mobility,A. monetary policy has its largest possible real-income effects when the exchange rate floats.B. fiscal policy has its largest possible real-income effects when the exchange rate floats.C. monetary and fiscal policies are both ineffective when the exchange rate fl

52、oats.D. fiscal policy has minimal real-income effects when the exchange rate is fixed. Answer: A11. Domestic fiscal policy is ineffective in a small open economy with perfect capital mobility and floating exchange rates becauseA. sterilization insures that any IS shifts will be completely offset by

53、LM shifts.B. the small open economy faces a vertical LM schedule, so a shift in the IS schedule has no effect on real income.C. the small open economy faces a horizontal LM schedule, so a shift in the IS schedule has no effect on the interest rate.D. expansionary fiscal policy leads to an increase i

54、n the interest rate, which induces an appreciation of the currency and induces net exports to fall, offsetting the effects of the initial fiscal expansion. Answer: D12. In a small open economy with perfect capital mobility and a floating exchange rate, an expansionary monetary policy will result in

55、A. an upward shift of the BP schedule.B. a higher equilibrium nominal interest rate.C. a lower equilibrium level of real income.D. a depreciation of the domestic currency. Answer: D13. In the two-country model with floating exchange rates, the initial impact of a domestic monetary policy expansion o

56、n the domestic economy is A. an increase in real income and an increase in the nominal interest rate.B. an increase in real income and a decrease in the nominal interest rate.C. a decrease in real income and an increase in the nominal interest rate.D. an increase in real income and no effect on the

57、nominal interest rate. Answer: B14. In the two-country model with floating exchange rates, the effect of a monetary policy change on the domestic economy is _ by subsequent changes in the exchange rate and foreign income.A. reducedB. magnifiedC. unaffectedD. completely offset Answer: B15. Which poli

58、cy will create a beggar-thy-neighbor effect in a system of floating exchange rates?A. a domestic fiscal expansion in a small open economyB. a domestic fiscal expansion in the two-country modelC. a domestic monetary expansion in the two-country modelD. a domestic monetary expansion in a small open ec

59、onomy Answer: C16. Which policy will create a locomotive effect in a system of floating exchange rates?A. a domestic fiscal expansion in a small open economyB. a domestic fiscal expansion in the two-country modelC. a domestic monetary expansion in the two-country modelA. a domestic monetary expansio

60、n in a small open economy Answer: B17. In the two-country model with floating exchange rates, a domestic monetary policy expansion leads to a(n):A. depreciation of the domestic currency and an increase in foreign real income.B. appreciation of the domestic currency and an increase in foreign real in

61、come.C. appreciation of the domestic currency and a decrease in foreign real income.D. depreciation of the domestic currency and a decrease in foreign real income. Answer: D18. In the two-country model with floating exchange rates, a foreign monetary expansion leads to A. no change in either the int

62、erest rate or domestic real income.B. a lower nominal interest rate and lower domestic real income.C. a higher nominal interest rate and lower domestic real income.D. a lower nominal interest rate and an increase in domestic real income. Answer: B19. In the two-country model with floating exchange r

63、ates, a domestic fiscal expansion A. leads to a decrease in foreign real income because the expansion causes an appreciation of the domestic currency, which causes an increase in the net exports of the foreign economy.B. leads to a decrease in foreign real income because the expansion lowers the interest rate, and thus spurs investment in the foreign country.C. leads to a decrease in foreign real income because the expansion leads to a higher interest rate, which induces a rightward shift in the foreign LM schedule.D. does not lead to a dec