25货币金融学(英语) 第二十五次课.ppt

The Economics of Money and Finance Chapter 16 The Challenge of Monetary Policy Ⅰ.Goals of Monetary Policy Goals 1. High Employment 2. Economic Growth 3. Price Stability 4. Interest Rate Stability 5. Financial Market Stability 6. Foreign Exchange Market Stability Goals often in conflict 1.High Employment High employment is a worthy goal for two reasons: (1)The alternative situation, high unemployment, causes much human misery, with people suffering financial distress, loss of personal self-respect, and ? in crime. （2） When u is high, the economy has not only idle workers but also idle resources, resulting in a lower GDP. But how low should u be? Because frictional unemployment (which involves searches by workers and firms to find suitable matchups) is desirable, and because policy can do little about structural unemployment (due to a mismatch between job requirements and the skills of workers), the goal of high employment should seek not u = 0 but u 0 consistent with full employment (at which the demand for labor equals the supply of labor). This level of u is called the natural rate of unemployment. 2.Economic Growth 3.Price Stability 4.Interest-Rate Stability Interest-rate stability is desirable because fluctuations in interest rates can create uncertainty and make it harder (for both firms and households) to plan for the future. A central bank may also want to reduce upward movements in interest rates because such movements generate hostility toward central banks and lead to demands that their independence and power should be reduced . 5.Stability of Financial Markets Financial crises can interfere with the ability of financial markets to channel funds from surplus spending units to deficit spending units, thereby leading to a sharp contraction in economic activity. The promotion of a more stable financial system in which financial crises are avoided is thus an important goal for a central bank. The stability of financial markets is also fos