第九讲：汇率决定的扩展模型货币替代模型.pptVIP

第九讲Currency substitution 货币替代模型 Introduction Now, it should be said at the outset that the name is something of a misnomer, because in one respect what is involved hardly amounts to currency: we are concerned here exclusively with money as a store of value. In other words, we ignore the means of payment function of money and treat it instead as simply an asset that happens to carry a fixed, zero rate of interest. Introduction The starting point for the analysis is to consider the situation of a (reasonably sophisticated) inhabitant of a country where holding foreign as well as domestic currency is both feasible and legal. What will determine the proportions of the two currencies in the agent’s portfolio of non-interest-bearing assets? Introduction The risk-averse wealth owner will respond to a higher rate of depreciation by raising the proportion of foreign money in his portfolio.Instead of domestic and foreign bonds as alternatives to money, the menu of assets is restricted here to the two currencies. Introduction At the same time, we introduce a richer specification of the real sector, with two products: a traded good whose price is determined in world markets and a nontraded good whose price depends only on conditions in the local economy. The result is that changes in the real exchange rate affect the value of wealth both through a real balance effect and over the longer term, through the impact of a change in the terms of trade on the current account of the balance of payments. The model Assumptions (1) Two goods are produced in the domestic economy: a tradeable and a non-tradeable. (2) The price of the non-tradeable, PN, is determined in the domestic economy by the condition that the market for non-traded goods clears at all times. (3) The (dollar) price of the tradeable is determined exogenously in the international economy. For simplicity, assume it is fixed at 1.0.6 It follows that the sterling price of tradeables is simply S, the price of a dollar. (4)