国际金融课件第4章.pptVIP

18-* E.the long run:purchasing power parity(PPP) The rate of appreciation or depreciation will be approximately equal to the percentage-point difference in the inflation rates. Rate of appreciation of the foreign currency =∏-∏f 18-* E.the long run:purchasing power parity(PPP) A country with a relatively high inflation rate will have a depreciating currency (a declining nominal-exchange-rate value of its currency). ? A country with a relatively low inflation rate will have an appreciating currency (an increasing nominal-exchange-rate value of its currency). ? 18-* E.the long run:purchasing power parity(PPP) 1975-2000 Figure analysis 18-* F.The long run:the monetary approach Inflation: an increase in the overall price level. Hyperinflation: very rapid increases 18-* F.The long run:the monetary approach The quantity theory then says that, in any country the money supply is equated with the demand for money, which is directly proportional to the value of GDP. Ms = k?P?Y, where Ms is the national money supply, which is controlled by national monetary policy, and k is a behavioral parameter. 18-* F.The long run:the monetary approach A rise in our money supply relative to the foreign money supply A rise in foreign real domestic product relative to our real domestic product 18-* F.The long run:the monetary approach Combining PPP and the quantity theory equations for two countries, we obtain a basis for the monetary approach to explaining or predicting exchange rates in the long run: e = P/Pf = (Ms/Msf)?(kf/k)?(Yf/Y). 18-* F.The long run:the monetary approach The equation predicts that a foreign nation will have an appreciating currency if is has some combination of slower money supply growth,faster growth in real output,or a rise in the ratio. 18-* F.The long run:the monetary approach E rises by 1 percent for Each 1 percent rise in the domestic monety supply (Ms),or Each 1 percent drop in the foreign monety supply (Msf),or Each 1 percent drop in domesti