1002-ch16曼昆 宏观经济学.ppt

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ECON1002 C/D (2011) Chapter 16: THE MONETARY SYSTEM * Case Study: Bank Runs and the Money Supply A run on banks: When people suspect their banks are in trouble, they may “run” to the bank to withdraw their funds, holding more currency and less deposits. Examples in Hong Kong: BEA in 2008 (temporarily, just one day); Hang Seng Bank in the 1960s. Under fractional-reserve banking, banks don’t have enough reserves to pay off ALL depositors, hence banks may have to close. Also, banks may make fewer loans and hold more reserves to satisfy depositors. These events increase R, reverse the process of money creation, cause money supply to fall. 0 ECON1002 C/D (2011) Chapter 16: THE MONETARY SYSTEM * Case Study: Bank Runs and the Money Supply During 1929-1933, a wave of bank runs and bank closings caused money supply in USA to fall 28%. Many economists believe this contributed to the severity of the Great Depression. Since then, deposit insurance policy has helped prevent bank runs In the U.K., though, Northern Rock bank experienced a classic bank run in 2007 and was eventually taken over by the British government. 0 ECON1002 C/D (2011) Chapter 16: THE MONETARY SYSTEM * (4) The Fed’s Tools of Monetary Control 0 ECON1002 C/D (2011) Chapter 16: THE MONETARY SYSTEM * The Fed’s 3 Tools of Monetary Control 1. Open-Market Operations (OMOs): the purchase and sale of government bonds (e.g., U.S. treasury bills) by the CB (e.g., the Fed). To increase money supply, Fed buys government bonds, paying with new dollars. …which are deposited in banks, increasing reserves …which banks use to make loans, causing the money supply to expand. To reduce money supply, Fed sells government bonds, taking dollars out of circulation, and the process works in reverse. 0 ECON1002 C/D (2011) Chapter 16: THE MONETARY SYSTEM * The Fed’s 3 Tools of Monetary Control 1. Open-Market Operations (OMOs