暨大国际金融 复习整理.doc

Examination Instructions for International Finance (2016)全英答题，给分高些The Structure of Examination Paper1. Definition of Term (54分, 20 points)名词解释，各章都有2. True or False (201分, 20 points)判断对错，从每章后面的summary里出3. Short Answer (410分, 40 points)简答题（综述题）4. Comprehensive Questions (210分, 20 points)综合题，比较之类的，把好几个知识点混合在一起Outline for Reviewing大纲1.Definition of Term 5个乘以4分Chapter 12: balance of payments accounting, current account balance，official settlements balance，national savingbalance of payments accounting收支会计: A countrys balance of payments accounts for its payments to and its receipts from foreigners. An international transaction involves two parties, and each transaction enters the accounts twice: once as a credit (+) and once as a debit (-).Current account balance (exports minus imports) 经常账户余额: net expenditure by foreigners on domestic goods and services.The official settlements balance官方结算余额: the negative value of official international reserve assets, and it shows a central banks holdings of foreign assets relative to foreign central banks holdings of domestic assets.The bookkeeping offset to the balance of official reserve transaction .National saving国民储蓄(S) = national income (Y) that is not spent on consumption (C) or government purchases (G).Chapter 13: appreciation, exchange rate, real rate of return, forward exchange rate, spot exchange rate, interest parity condition, vehicle currencyAppreciation增值: An increase in the value of a currency relative to another currency. Exchange rate汇率: The price of one currency in terms of another is called an exchange rate.The real rate of return实际回报率: The expected rate of return that savers consider in deciding which assets to hold is the expected real rate of return, that is, the rate of return computed by measuring asset values in terms of some broad representative of products that savers regularly purchase.forward exchange rates远期汇率: The exchange rates for currency exchanges that will occur at a future (“forward”) date. Forward dates are typically 30, 90, 180, or 360 days in the future. Rates are negotiated between two parties in the present, but the exchange occurs in the future.spot exchange rates即期汇率：The exchange rates for currency exchanges “on the spot”, or when trading is executed in the present.Interest parity condition利率平价条件: The condition that the expected returns on deposits of any two currencies are equal when measured in the same currency is called the interest parity condition.vehicle currency周转货币: Because of its pivotal role in so many foreign exchange deals, the dollar is sometimes called a vehicle currencyChapter 14: aggregate money demand, money supply, exchange rate overshooting,Aggregate money demand货币总需求: aggregate money demand is the total demand for money by all households and firms in the economy.is just the sum of all the economys individual money demands.Money supply货币供给: the total stock of money in the economy; currency held by the public plus money in accounts in banks Exchange rate overshooting汇率超调: the exchange rate is said to overshoot when its immediate response to a disturbance is greater than its long-run response.Chapter 15: Fisher effect, law of one price, nominal interest rate, purchasing power parity (PPP), real exchange rate, relative PPPFisher effect费雪效应: all else equal, a rise in a countrys expected inflation rate will eventually cause an equal rise in the interest rate that deposits of its currency offer. Similarly, a fall in the expected inflation rate will eventually cause a fall in the interest rate. This long-run relationship between inflation and interest rates is called the fisher effect.Law of one price一价定律: the low of one price states that in competitive markets free of transportation costs and official barriers to trade(such as tariffs),identical goods sold in different countries must sell for the same price when their prices are expressed in terms of the same currency.Nominal interest rate名义利率: when we wish to differentiate a real exchange rate, which is the relative price of two output baskets, from a relative price of two currencies, we will refer to the latter as a nominal exchange rate.Purchasing power parity(PPP)购买力平价: the theory of purchasing power parity states that the exchange rate between two countries currencies equals the ratio of the countries price levels.Real exchange rate实际汇率: the real exchange rate between two countries currencies is a broad summary measure of the prices of one countrys goods and services relative to the others.Relative PPP相对购买力平价: states that the percentage change in the exchange rate between two currencies over any period equals the difference between the percentage changes in national price levels.Chapter 16: AA schedule, inflation bias, aggregate demand, J-curve, DD schedule, pass-throughAA schedule: The schedule of exchange rate and output combinations that are consistent with equilibrium in the domestic money market and the foreign exchange market is called the AA schedule.Inflation bias通货膨胀偏差: Refers to the difference between the mean value and the target value of inflation according to the circulation by the basic model.Aggregate demand总需求: The amount of a countrys goods and services demanded by households and firms throughout the world.J-curve: If the current account initially worsens after a depreciation, its time path has an initial segment reminiscent of a J and therefore is called the J-curve.DD schedule: The curve shows all combinations of output and the exchange rate for which the output market is in short run equilibrium.pass-through: The percentage from the exchange rate to import prices by which import prices rise when the home currency depreciates by 1 percent.Chapter 17: balance of payments crisis, bimetallic standard, capital flight, devaluation, gold exchange standard, gold standard, imperfect asset substitutability, managed floating exchange rates, perfect asset substitutability, reserve currency, revaluation, risk premium, self-fulfilling currency crises, sterilized foreign exchange interventionbalance of payments crisis国际收支危机: When a central bank does not have enough official international reserve assets to maintain a fixed exchange rate, a balance of payments crisis results.bimetallic standard复本位制: the value of currency is based on both silver and gold.capital flight资本外逃: financial capital is quickly moved from domestic assets to foreign assetsdevaluation贬值: a devaluation occurs when the central bank raises the domestic currency price of foreign currencygold exchange standard金汇兑本位: halfway between the gold standard and a pure reserve currency standard is the gold exchange standardgold standard金本位: gold acts as official international reserves that all countries use to make official international payments.imperfect asset substitutability: In general, foreign and domestic assets may differ in the amount of risk that they carry: they may be imperfect substitutes.managed floating exchange rates管理浮动汇率制度: system in which governments may attempt to moderate exchange rate movements without keeping exchange rates rigidly fixed .perfect asset substitutability: the key feature of our model that leads to these results is the assumption that the foreign exchange market is in equilibrium only when the expected returns on domestic and foreign currency bonds are the same.reserve currency储备货币: one currency acts as official international reserves.Revaluation: a revaluation occurs when the central bank lower the domestic currency price of foreign currencyrisk premium风险溢价: default risk and exchange rate riskself-fulfilling currency crises: Expectations of a balance of payments crisis only worsen the crisis and hasten devaluation that occur in such circumstances often are called self-fulfilling currency crises .sterilized foreign exchange intervention冲销性外汇干预: central banks sometimes carry our equal foreign and domestic asset transactions in opposite directions to nullify the impact of their foreign exchange operations on the domestic money supply . this type of policy is called sterilized foreign exchange interventionChapter 18: external balance, internal balance, expenditure-changing policy, expenditure-switching policy, price-specie-flow mechanismexternal balance：A countrys current account is neither so deeply in deficit that the country may be unable to repay its foreign debts in the future nor so strongly in surplus that foreigners are put in that ernal balance：The full employment of a countrys resources and domestic price level stability.expenditure-changing policy：Changing social needs or total expenditure level of the national economy policy, whose purpose is to change aggregate demand to change the demand for foreign goods, services and financial assets, and achieve the balance of payments adjustment. expenditure-switching policy：The policies which can affect the international competitiveness of commodities and to increase their income relative to spending by changing the spending structure.price-specie-flow mechanism：Under the internationally common practice of the gold standard, a countrys international balance of payments can keep equilibrium automatically by the fluctuations of commodity price and the output or input of gold.2.True or False summary里的Cover all chapters introduced3/4.Short Answer and Comprehensive QuestionsChapter 131.The Effect of Changing Interest Rates on the Current Exchange Rate2.The Effect of Changing Expectations on the Current Exchange RateChapter 141.the Money Supply and the Exchange Rate in the Short Run2.Permanent Money Supply Changes and the Exchange RateChapter 151.The Relationship Between PPP and the Law of One Price2.The Fundamental Equation of the Monetary Approach3.Explaining the Problems with PPPChapter 161.Temporary Changes in Monetary and Fiscal Policy2.Permanent Shifts in Monetary and Fiscal Policy Chapter 171.Stabilization Policies with a Fixed Exchange Rate2.Benefits and Drawbacks of the Gold StandardChapter 181.Mcroeconomic Policy Goals in an Open Economy2.Analyzing Policy Options under the Bretton Woods SystemChapter 19The Case for Floating Exchange RatesShort AnswerChapter 131. The Effect of Changing Interest Rates on the Current Exchange RateAn increase in the interest paid on deposit of a currency causes that currency to appreciate against foreign currencies.(+because分析一下)A rise in dollar interest causes the dollar to appreciate against the euro.(E down)A rise in euro interest causes the dollar to depreciate against the euro. (E rise)2. The Effect of Changing Expectations on the Current Exchange RateA rise in the expected future exchange rate causes a rise in the current exchange rate ,similarly ,a fall in the expected future exchange rate causes a fall in the current exchange rate .(+because分析一下)Chapter 141. the Money Supply and the Exchange Rate in the Short RunAn increase in Europes money supply causes a depreciation of the euro (i.e., appreciation of the dollar).A reduction in Europes money supply causes an appreciation of the euro (i.e., a depreciation of the dollar).The change in the European money supply does not disturb the U.S. money market equilibrium.2. Permanent Money Supply Changes and the Exchange RatePermanent changes in the money supply push the long-run equilibrium price level proportionally in the same direction.These changes do not influence the long-run values of output, the interest rate, or any relative prices.An increase in the money supply can cause the exchange rate to overshoot its long-run level in the short run.Chapter 151.The Relationship Between PPP and the Law of One Pricea)The law of one price applies to individual commodities, while PPP applies to the general price level.b)If the law of one price holds true for every commodity, PPP must hold automatically for the same reference baskets across countries.Proponents of the PPP theory argue that its validity does not require the law of one price to hold exactly.2.The Fundamental Equation of the Monetary ApproachMonetary approach to the exchange rate uses the absolute version of PPP.It predicts that levels of average prices across countries adjust so that the quantity of real monetary assets supplied will equal the quantity of real monetary assets demanded:Predictions about changes in:Money supply: a permanent rise in the domestic money supply causes a proportional increase in the domestic price level, causing a proportional depreciation in the domestic currency (through PPP). same prediction as long run model without PPP Interest rates: a rise in domestic interest rateslowers the demand of real monetary assets, and is associated with a rise in domestic prices, causing a proportional depreciation of the domestic currency (through PPP). Output level: a rise in the domestic level of production and income (output) raises domestic demand of real monetary assets, is associated with a decreasing level of average domestic prices (for a fixed quantity of money supplied),causing a proportional appreciation of the domestic currency (through PPP).1. Explaining the Problems with PPPThere is little empirical support for absolute purchasing power parity.Relative PPP is more consistent with data, but it also performs poorly to predict exchange rates.The failure of the empirical evidence to support the PPP and the law of one price is related to:(1)Trade barriers and non-tradable product. (2)Imperfect competition(3)Differences in measures of average prices for baskets of goods and servicesChapter 161. Temporary Changes in Monetary and Fiscal PolicyThere are two types of government policy we concern about:a) Monetary policy： It works through changes in the money supply.b) Fiscal policy : It works through changes in government spending or taxes.Temporary policy shifts are those that the public expects to be reversed in the near future and do not affect the long-run expected exchange rate.（公众预期政策短期会逆转）Assume that policy shifts do not influence the foreign interest rate and the foreign price level.n Monetary PolicyAn increase in money supply (i.e expansionary monetary policy) raises the economys output.-The increase in money supply creates an excess supply of money, which lowers the home interest rate.-As a result, the domestic currency must depreciate (i.e., home products become cheaper relative to foreign products) and aggregate demand increases.n Fiscal PolicyAn increase in government spending, a cut in taxes, or some combination of the two (i.e, expansionary fiscal policy) raises output. The increase in output raises the transactions demand for real money holdings, which in turn increases the home interest rate. As a result, the domestic currency must appreciate. n Policies to Maintain Full EmploymentTemporary disturbances that lead to recession can be offset through expansionary monetary or fiscal policies.Temporary disturbances that lead to over employment can be offset through contractionary monetary or fiscal policies.2. Permanent Shifts in Monetary and Fiscal Policy A permanent policy shift affects not only the current value of the governments policy instrument but also the long-run exchange rate.This affects expectations about future exchange rates.-A Permanent Increase in the Money SupplyA permanent increase in the money supply causes the expected future exchange rate to rise proportionally.As a result, the upward shift in the AA schedule is greater than that caused by an equal, but transitory, increase (compare point 2 with point 3 in Figure 16-14). Adjustment to a Permanent Increase in the Money SupplyThe permanent increase in the money supply raises output above its full-employment level.As a result, the price level increases to bring the economy back to full employment. (Figure 16-15 shows the adjustment back to full employment.)-A Permanent Fiscal ExpansionA permanent fiscal expansion changes the long-run expected exchange rate.If the economy starts at long-run equilibrium, a permanent change in fiscal policy has no effect on output.It causes an immediate and permanent exchange rate jump that offsets exactly the fiscal policys direct effect on aggregate demand.A temporary increase in the money supply causes a depreciation of the currency and a rise in output.Permanent shifts in the money supply cause sharper exchange rate movements and therefore have stronger short-run effects on output than transitory shiftsChapter 171.Stabilization Policies with a Fixed Exchange Ratel Monetary PolicyUnder a fixed exchange rate, central bank monetary policy tools are powerless to affect the economys money supply or its output.l Fiscal Policy-expansionary fiscal policy cause the rise in output which raises money demand.-To prevent an increase in the home interest rate and an appreciation of the currency, the central bank must buy foreign assets with money, thereby increasing the money supply) This policy is effective in the fixed exchange rate.l Changes in the Exchange Rate1. Devaluation（币值下调）a) It occurs when the central bank raises the domestic currency price of foreign currency, E.b) It causes:A rise in output. A rise in official reserves. An expansion of the money supplyc) It is chosen by governments to:Fight domestic unemployment.Improve the current account .Affect the central banks foreign reserves2. Revaluation（币值上调）： It occurs when the central bank lowers E.3. In order to devalue or revalue, the central bank has to announce its willingness to trade domestic against foreign currency, in unlimited