chapter 10 Floating Exchange Rates and Internal Balance.pptVIP免费

HuangzhiyongHuangzhiyongNanjingUniversityofFinance&Economicshzy196896@sina.comTel：84028241CHAPTER10CHAPTER10FloatingExchangeRatesFloatingExchangeRatesandInternalBalanceandInternalBalance一、Monetarypolicywithfloatingexchangerates•Withfloatingexchangerates,Monetarypolicyexertsastronginfluenceoverdomesticproductandincome.•Figure10.1Figure10.1MoneyExpansion:FloatingExchangeRate•Underfloatingexchangerates,monetarypolicyispowerfulinitseffectsoninternalbalance•Theinducedchangeintheexchangeratereinforcesthedomesticeffectsofmonetarypolicy.•Thisgeneralconclusionholdswhateverthedegreeofcapitalmobility.•Howlargearethefollow-oneffectsfromthecurrencydepreciation?–AmodeloftheglobaleconomydevelopedbytheOECDprovidesomeanswers–Theinduceddepreciationofthecountry’scurrencyincreasestheeffectofthemonetaryexpansionbyabout50percentonaverage.Figure10.2ExpansionaryMonetaryPolicy:IS-LM-FE二、Fiscalpolicywithfloatingexchangerates•Figure10.3ExpansionaryFiscalPolicyFigure10.3ExpansionaryFiscalPolicy:FloatingExchangeRateFigure10.4ExpansionaryFiscalPolicy:IS-LM-FE•The“feedback”effectsonthedomesticeconomydependonwhichwaytheexchangeratechanges.–Ifatfirstappreciates,thenthecountrylosespricecompetitiveness,theexpansionaryeffectsisreducedby“internationalcrowdingout”.–Ifdepreciates,theenhancedpricecompetitivenessandresultingincreaseintheCAgiveafurthertrade-basedstimulustodomesticproduction.•Discuss:whyareU.S.tradedeficitssobig?三、Shockstotheeconomy•Internalshocks–DomesticMonetaryshock–Domesticspendingshocks•Externalshocks–Internationalcapital-flowshocks–InternationaltradeshocksFigure10.5Anadverseinternationalcapital-flowshockInterestrate=iDomesticproduct=YLMISFE0.06110E0IS4FE’FE4E40.07120Figure10.6AnadverseinternationaltradeshockInterestrate=iDomesticproduct=YLMISFE0.05110E0IS’FE’T50.06100Figure10.7EffectsofShocksonDomesticProduct四、Internalimbalanceandpolicyresponses•Withfloatingexchangeratesachangeintheexchangeratecanachieveexternalbalancefollowingashock.butcan...