国际金融练习ch13.docVIP

Chapter 13: The Price Level, Real Output, and Economic Policymaking I. Chapter Overview Chapter 13 begins by showing how the aggregate demand schedule can be derived from the IS-LM-BP schedules of the previous three chapters. This is done by shifting the LM schedule in the real income-nominal interest rate plane with respect to changed in the price level, which produces the downward sloping aggregate demand schedule between aggregate price and real income. The text then demonstrates how fiscal and monetary expansions and contractions translate into shifts of the aggregate demand schedule. Parallels are drawn in each case between the relative effectiveness of fiscal and monetary policies in the IS-LM-BP model depending on (1) the exchange rate regime, (2) the degree of capital mobility and (3) whether or not sterilizations are implemented, and the extent to which these translate into a net shift in the position of the aggregate demand schedule. Next, the aggregate supply schedule is derived on the basis of nominal rigidities in the labor market. Specifically, firms demand labor as an input for production, which is subject to diminishing marginal returns so that under perfect competition the value of marginal product is set equal to the nominal wage. Explicit and implicit contracts are used to justify nominal wage rigidity. The text then demonstrates how inflexible nominal wages lead to an upward sloping aggregate supply schedule, while fully flexible nominal wages lead to a vertical aggregate supply schedule. These are defined as the short-run and long-run aggregate supply schedules respectively. The chapter then uses the AS-AD model to study the consequences of fiscal and monetary policies for the aggregate price level and output under both fixed and floating exchange rates. A substantial amount of discussion is also devoted to the role that rational expectations can play in mitigating or potentially eliminating the consequences of anticipated policy actio