巴罗宏观经济学现代观点10章.pptVIP

Macroeconomics Chapter 10 Concepts of Money Fiat money has value due to government fiat, rather than through intrinsic value. Commodity money, such as gold and silver coins, which do have intrinsic value. High-powered money, which adds the deposits held by banks and other depository institutions At the Federal Reserve. Another name for high-powered money is the monetary base. Concepts of Money Monetary aggregate A monetary aggregate is the total dollar stock of a group of financial assets defined to be money. The most common definition, called M1 Checkable deposits issued by banks and other financial institutions. Concepts of Money Monetary aggregate M2 includes household holdings of savings deposits, small-time deposits, and retail money-market mutual funds. The M2 definition goes beyond the concept of money as a medium of exchange. In our model, it is best to use a narrower definition of money, for example, as currency held by the public. The Demand for Money Money is hand-to-hand currency Assume that the interest rate paid on money is zero. Bonds and ownership of capital Interest-bearing assets These assets pay a positive return to the holder. The Demand for Money The household budget constraint in nominal terms PC + ?B + P·?K = π + wL + i · ( B+ PK) nominal consumption + nominal saving = nominal income The Demand for Money “demand for money,” Md, The average holding of money that results from the household’s optimal strategy for money management. The Demand for Money The Interest Rate and the Demand for Money A higher interest rate, i, provides a greater incentive to hold down average holdings of money, M, in order to raise average holdings of interest-bearing assets, B + PK. That is, with a higher i, households are more willing to incur transaction costs in order to reduce M The Demand for Money The Interest Rate and the Demand for Money We predict, accordingly, that an increase in i reduces the nominal demand for money, Md. For a given pri