国际金融学policies in the open economy课件参考.ppt

Chinese Finance Research Institute II. Assumptions A small open economy model (SOE) Price rigidity (hence aggregate supply curve is horizontal, and there is no difference between real exchange rate and nominal rate) Static expectation Perfect asset substitutability Perfect capital mobility M-F Model M-F Model III. Components III.1 IS Schedule Y=Y(i, A, SP*/P) III.2 LM Schedule Md/P=f(Y,i)=Ms/P III.3 BP Schedule In case of static expectations, risk neutrality and perfect capital mobility, i-i*=Etst+1-st=0 IV. Fiscal Monetary Policies under Fixed Rate IV.1 Monetary Policy: See Figure 3-3-1. Channel: Ms??LM shifts to the right?i??capital outflows?deficit of balance of payments?depreciation pressure?central bank’s intervention?Ms??LM shifts to the left?original equilibrium. IV.2 Fiscal Policy: See Figure 3-3-2. Channel: A??IS shifts to the right?i??capital inflows?surplus of balance of payments?appreciation pressure?central bank’s intervention?Ms??LM shifts to the right?new equilibrium. M-F Model Figure 3-3-1 Monetary Policy in a Fixed Rate i Y ie Ye IS LM? BP LM E B Figure 3-3-2 Fiscal Policy in a Fixed Rate i Y ie Ye IS BP LM E B IS? LM? E? Ye? IV.3 Conclusion Policy effectiveness Conclusion: As far as output growth is concerned, monetary policy is totally ineffective under a fixed rate regime, while an expansionary fiscal policy can lead to a larger increase of output than that under a floating rate economy. Impact on the interest rate Conclusion: Under both circumstances, home interest rate keeps unchanged. Actually, this is a very simple and intuitive conclusion (Why?). M-F Model V. Monetary and Fiscal Policies in Floating Rate V.1 Monetary Policy Effectiveness: See Figure 3-3-3. Channel: Ms??LM shifts to the right?i??capital outflows?deficit of balance of payments?depreciation ?IS shifts to the right?i??LM shifts to the left?new equilibrium. V.2 Fiscal Policy Effectiveness: See Figure 3-3-4. Channel: A??IS shifts to the right?i??c