26货币金融学(英语) 第二十六次课.pptVIP

The Economics of Money and Finance Ⅱ.Money and Inflation 1.The Evidence “Inflation is Always and Everywhere a Monetary Phenomenon” (M. Friedman) Evidence In every case when ? high for sustained period, M growth is high Examples: 1. Latin American inflations 2. German Hyperinflation, 1921–23 Controlled experiment, particularly after 1923 invasion of Ruhr—government prints money to pay strikers, ? 1 million % Meaning of “inflation” Friedman’s statement uses definition of ? as continuing, rapidly rising price level: Only then does evidence support it German Hyperinflation: 1921–23 Response to Continually Rising Ms 2.Monetarist and Keynesian Views of ? Monetarist View Only source of AD shifts and ? in this Figure can be Ms growth Keynesian View Allows for other sources of AD shifts, but comes to same conclusion that only source of sustained high ? is Ms growth Response to One-Shot Increase in G Response to Supply Shock 3.Cost-Push Inflation 4.Demand-Pull Inflation High Employment Target, YT Yn 1. Y = Yn YT, government shifts AD out 2. Y = YT Yn, AS shifts in 3. Y = Yn YT, government shifts AD out, and repeat steps 2 and 3, etc. 4. P ? continually: i.e., get ? 5.Budget Deficits and ? Government Budget Constraint DEF = G – T = ?MB + ?B (1) Deficit financed by bonds, no effect on MB and Ms (2). Deficit not financed by bonds, MB and Ms ? Financing persistent budget deficit by money creation leads to sustained ? (1) Deficit financed by Ms ? leads to AD shifts out (2) If deficit persists, Ms ? continually and get P ? continually, i.e., ? Conclusion: Deficit ? ?, only if it is (1） Persistent （2） Financed by money creation rather than by bonds Budget Deficits and ? Budget deficits in other countries （1) Bond finance hard (2) Deficit likely to lead to money creation and ? Budget deficits in U.S. (1) Large capital market, so can bond finance (2) Fed has choice whether to monetize deficit, but may be pressured to do so Conclusion: Deficits do not necessarily ? ? 6