ch19 Macroeconomic Policy and Coordination Under Floating Exchange Rates 克鲁格曼国际经济学第六版英文演示教学.pptVIP

Chapter 19 Macroeconomic Policy and Coordination Under Floating Exchange Rates;Chapter Organization;Introduction;The Case for Floating Exchange Rates;Monetary Policy Autonomy Floating exchange rates: Restore monetary control to central banks Allow each country to choose its own desired long-run inflation rate;AA1;The Case Against Floating Exchange Rates;Discipline Floating exchange rates do not provide discipline for central banks. Central banks might embark on inflationary policies (e.g., the German hyperinflation of the 1920s). The pro-floaters’ response was that a floating exchange rate would bottle up inflationary disturbances within the country whose government was misbehaving.;Destabilizing Speculation and Money Market Disturbances Floating exchange rates allow destabilizing speculation. Countries can be caught in a “vicious circle” of depreciation and inflation. Advocates of floating rates point out that destabilizing speculators ultimately lose money. Floating exchange rates make a country more vulnerable to money market disturbances. Figure 19-2 illustrates this point. ;AA1;Injury to International Trade and Investment Floating rates hurt international trade and investment because they make relative international prices more unpredictable: Exporters and importers face greater exchange risk. International investments face greater uncertainty about their payoffs. Supporters of floating exchange rates argue that forward markets can be used to protect traders against foreign exchange risk. The skeptics replied to this argument by pointing out that forward exchange markets would be expensive. ;Uncoordinated Economic Policies Floating exchange rates leave countries free to engage in competitive currency depreciations. Countries might adopt policies without considering their possible beggar-thy-neighbor aspects.;The Illusion of Greater Autonomy Floating exchange rates increase the uncertainty in the economy without really giving macroeconomic policy greater fr