国际经济学基础13(精品·公开课件).pptVIP

7.Absorption approach In the case of unemployment, Y could increase, so that a devaluation would tend to increase net exports( if the elasticity conditions are satisfied) and bring about an increase in output( given a constant absorption). Full employment: it is not possible to produce more goods and services. If devalue, net export will tend to increase,and the end result is strictly inflation,. When foreigners try to spend more on our domestic production, no increase in output forthcoming, the only result: biding-up of the prices of the goods and services. 7.Absorption approach Conclusion: (1)correct trade balance, increase Y,reduce absorption. (2)How devaluation affects the trade balance? In an unemployment: income effect ΔY, (3)Devaluation affects on income (4)Devaluation affects absorption (5)Shortcoming: only in a world without capital flows. Summary 1 This chapter examined how a trade deficit is automatically corrected through price or income changes, or both, under a flexible or a fixed exchange rate system. For simplicity, we assumed no autonomous international capital flows, so that a trade deficit is the same as, or is synonymous with, a balance-of-payments deficit. Summary 2 The more elastic are the U.S.demand for imports(DM) and the foreign demand for U.S. exports(DX) in terms of euros, the more elastic are the U.S demand and supply of euros, and the less inflationary a depreciation would be to correct a U.S trade or balance-of-payments deficit. The price elasticity of demand for a commodity is given by the percentage change in the quantity demanded of the commodity divided by the percentage change in its price. Summary 3 The foreign exchange market is stable if the supply curve of foreign exchange is positively sloped or, if negatively sloped, is steeper than the demand cureve of foreign exchange.According to the Marshall-Lerner condition, the foreign exchange market is stable if the sum of price elasticities of the demands for im