宏观经济学（第十三版）课件：International Adjustment and Interdependence

InternationalAdjustmentandInterdependence

.IntroductionCountriesareinterdependentBoomsorrecessionsinonecountryspillovertoothercountriesthroughtradeflowsChangesininterestratesinanymajorcountrycauseimmediateexchangeorinterestratemovementsinothercountriesThischapterexplorestheissuesofinternationalinterdependencefurther:MechanismsthroughwhichacountrywithafixedexchangerateadjuststobalanceofpaymentsproblemsAspectsofbehaviorofthecurrentflexibleexchangeratesystem23-2AdjustmentUnderFixedExchangeRatesAdjustmenttoabalance-of-paymentsproblemcanbeachievedintwoways:ChangeineconomicpolicyMonetarypolicyFiscalpolicyTariffsDevaluationsAutomaticadjustmentmechanismsMoneysupplyspendingUnemploymentwagesandpricescompetitiveness23-3TheRoleofPricesintheOpenEconomyTherealexchangerateisexpressedas:(1)

assumethatexchangerateandforeignpricesaregivenHowdoestheopennessoftheeconomyaffect

theaggregatedemandcurve?AnincreaseinthepricelevelreducesdemandHigherpricelevelimplieslowerrealbalances,higherinterestrates,andreducedspending

Giventheexchangerate,ourgoodsaremoreexpensivetoforeignersandtheirgoodsarerelativelycheaperforustobuy

exportsdecreaseandimportsincrease23-4TheRoleofPricesintheOpenEconomy

23-5Figure23-1showsthedownwardslopingADcurvewhereandtheNX=0curveAtpointEthehomecountryhasatradedeficitToachievetradebalanceequilibrium,wewouldhavetoBecomemorecompetitive(exportingmoreandimportingless)ReduceourlevelofincomeinordertoreduceimportspendingTheRoleofPricesintheOpenEconomy

23-6Whatshouldthecountrydo?ThecentralbankcoulduseitsreservestofinancetemporaryimbalancesofpaymentsCanborrowforeigncurrenciesabroadCountrymustfindawayofadjustingthedeficitCannotmaintainandfinancecurrentaccountdeficitsindefinitelyorforlongperiodsoftimeTheRoleofPricesintheOpenEconomy

23-7AutomaticadjustmentWhenthecentralbanksellsforeignexchange,itreducesdomestichighpoweredmoneyandthemoneystockDeficitatEimpliescentralbankispeggingtheexchangerate,sellingforeignexchangetokeeptheexchangeratefromdepreciatingOvertimetheADschedulewillbeshiftingdownwardandtotheleftTheRoleofPricesintheOpenEconomy

23-8AutomaticadjustmentPointEisalsoapointofunemploymentUnemploymentleadstodeclinesinwagesandcostsOvertime,theSRequilibriumpoint,E,movesdownwardastheASandADshiftPointE’isaLRequilibriumpointandthereisnoneedforexchangemarketequilibriumautomaticadjustmentPoliciestoRestoreBalanceTheclassicaladjustmentprocessmaytaketimealternativeispoliciestorestoreexternalbalanceBecauseoftheirsideeffects,policiestorestoreexternalbalancemustgenerallybecombinedwithpoliciestoachievefullemploymentPoliciestocreateemploymentwilltypicallyworsentheexternalbalancePoliciestocreateatradesurpluswillaffectemploymentNecessarytocombineexpenditure-switching

policies,whichshiftdemandbetweendomesticandimportedgoods,andexpenditure-reducing/increasingpoliciesinordertocopewiththetwotargetsofinternalbalanceandexternalbalance.23-9PoliciestoRestoreBalanceCanusepoliciestoreduceaggregatedemandexpenditurereducingpoliciesThetradedeficitisexpressedas(2)Balance-of-tradedeficitcanbereducedbyreducingspending(C+I+G)relativetoincome(restrictivemonetaryand/orfiscalpolicy)Thelinkbetweentheexternaldeficitandbudgetdeficits: (2a)IfSandIareconstant,changesinthebudgettranslateoneforoneintochangesintheexternalbalanceBudgetcuttingbringaboutequalchangesintheexternaldeficitbutbudgetcuttingwillaffectSandI,thusneedamorecompletemodeltoexplainhowbudgetcutsaffectexternalbalance

23-10Devaluation TheunemploymentthataccompaniesautomaticadjustmentsuggeststheneedforanalternativepolicyforrestoringinternalandexternalbalanceThemajorpolicyinstrumentfordealingwithpaymentdeficitsisdevaluation=anincreaseinthedomesticcurrencypriceofforeignexchangeGiventhenominalpricesinthetwocountries,devaluation:IncreasestherelativepriceofimportedgoodsinthedevaluingcountryReducestherelativepriceofexportsfromthedevaluingcountry23-11ExchangeRatesandPricesThepriceleveltypicallychangeswiththeexchangerate(includingafteradevaluation)TheessentialissuewhenacountrydevaluesiswhetheritcanachievearealdevaluationArealdevaluationoccurswhenitreducesthepriceofthecountry’sowngoodsrelativetothepriceofforeigngoodsUsingthedefinitionoftherealexchangerate:Arealdevaluationoccurswhene/Prisesorwhentheexchangerateincreasesbymorethanthepricelevel23-12TheMonetaryApproach

totheBalanceofPaymentsThereisalinkbetweenthemoneysupplyandtheexternalbalancetheadjustmentprocessmustultimatelyleadtotherightmoneystocksothatexternalpaymentswillbeinbalanceTheonlywaytheadjustmentprocesscanbesuspendedisthroughsterilizationoperationsCentralbanksfrequentlyoffsettheimpactofforeignexchangemarketinterventiononthemoneysupplythroughOMOAdeficitcountrythatissellingforeignexchangeandcorrespondinglyreducingitsmoneysupplymayoffsetthisreductionbyopenmarketpurchasesofbondsthatrestorethemoneysupplyPersistentdeficitsarepossibleCBactivelymaintainingthestockofmoneytoohighforexternalbalance

23-13InterestDifferentialsandExchangeRateExpectationsInourmodelofexchangeratedeterminationinternationalcapitalmobilitywasassumedWhencapitalmarketsaresufficientlyintegrated,weexpectinterestratestobeequatedacrosscountries23-14InterestDifferentialsandExchangeRateExpectationsFigure23-9showstheU.S.federalfundsrateandthemoneymarketrateinGermanyTheseratesarenotequal:Howdowesquarethisfactwithourtheory?23-15ExchangeRateExpectationsHaveassumedthatcapitalflowsinternationallyinresponsetonominalinterestdifferentialsTheoryisincompletewhenexchangeratescanandareexpectedtochangeMustextendouranalysistoincorporateexpectationsofexchangeratechangesTotalreturnonforeignbondsmeasuredinourcurrencyistheinterestrateontheforeigncurrencypluswhateverearnedfromtheappreciationoftheforeigncurrency,OR

(5)

23-16ExchangeRateExpectationsInvestordoesnotknowatthetimeofinvestmenthowmuchtheexchangeratewillchangeThetermshouldbeinterpretedastheexpectedchangeintheexchangerateThebalanceofpaymentsequationneedstobemodifiedNetcapitalflowsaregovernedbythedifferencebetweenourinterestrateandtheforeignrateadjustedforexpecteddepreciation:Thebalanceofpaymentsequationis:

(6)23-17ExchangeRateExpectationsTheadjustmentforexchangerateexpectationsthusaccountsforinternationaldifferencesininterestratesthatpersistevenwhencapitalisfreelymobileamongcountriesWhencapitaliscompletelymobile,weexpectinterestratestobeequalized,afteradjustingforexpecteddepreciation: