货币金融学7版英文课程--16-大学课程2.pptVIP

Chapter 16 Determinants of the Money Supply The Simple Deposit Multiplier from Chapter 15 Simple Deposit Multiplier 1 ?D = ? ?R r Deriving the formula R = DR = r ? D 1 D = ? R r 1 ?D = ? ?R r Critique of the Simple Model The simple model of multiple deposit creation shows how the Bank of Canada can control D by setting R. That simple model however, ignores 1. the public’s decisions regarding how much C to hold, the banks’ decisions regarding the amount of R they wish to hold, and borrowers’ decisions on how much to borrow from banks. Recall also that the Bank of Canada can exert more precise control over MB ( = C + R) than over R. The Money Supply Model Because the Bank of Canada can exert more precise control over MB than it can over R, in Chapter 16 we derive a multiplicative relation between M and MB, M = m ? MB, where m is the money multiplier. m relates the change in M to a given change in MB. Money Multiplier M = m ? MB Deriving Money Multiplier R = DR DR = r ? D R = (r ? D) Adding C to both sides R + C = MB = C + (r ? D) 1. Tells us amount of MB needed support D and C 2. An extra $1 of MB that arises from an extra $1 of C does not support any additional D. That is, the C component of MB does not lead to a multiple deposit creation as the R component does. (Continued) To put it differently, An ? in MB that goes into C is not multiplied, whereas an ? that goes into supporting deposits is multiplied. We have MB = C + (r ? D) To deal with currency drains, we also assume that C = c ? D where c is the currency ratio. Hence, MB = (c ? D) + (r ? D) = (c + r ) ? D M = (c ??D) + D = (1 + c) ??D m 1/r because no multiple expansion for currency and because as D ? ER ? An Example r = 5% C = $40 billion D = $160 billion M (= M1+) = C + D = $200 billion The money multiplier tells us that given the behavior of the public as represented by c = 0.25 and that of ban