中级宏观经济学(英文)19_Money_Supply.pptVIP

Intermediate Macroeconomics Lecture 19 Money Supply 100%-reserve banking Fractional-reserve banking Money Supply A model of money supply The monetary base: C+R The reserve-deposit ratio: rr = R/D The currency-deposit ratio: cr = C/D Money supply: M = C + D Monetary base: B = C + R Money Supply M/B = (C+D) / (C+R) M/B = (cr+1) / (cr + rr) M = [(cr+1) / (cr + rr)]*B M = m * B m: the money multiplier Money Supply Money supply depends on Monetary base (B): + Reserve-deposit ratio (rr): - Currency-deposit ratio (cr): - Money Supply Instruments of monetary policy Open-market operation Reserve requirement Discount rate Money Demand Portfolio theories of money demand --- the role as a store of value --- offers a different combination of risk and return than other assets (safe/normal return) The D for M depends on the risk and return offered by M and by the various assets households can hold instead of M Money Demand Example: Are portfolio theories useful for studying money D? Depends… Narrow measures of M --- Broad measure of M --- plausible M is a dominated asset (as a store of value, it exists alongside other assets that are always better) Money Demand Transaction theories of money D --- the role as a medium of exchange --- best explains why people hold narrow measures of money --- although returns are low, benefits of making transactions more convenient are important Money Demand Baumol-Tobin model of cash management Money holding over the year time M holding M holding time 1 1 Y Money Demand Total cost of trips to the bank: Forgone interest: i * (Y/2N) Cost of trips: F * N Money Demand Minimize C ? Money demand depends on Fixed cost for trips to the bank: + Expenditure: + i-rate: - Financial Innovation Near Money Near money ---non-monetary assets that have acquired some of the liquidity of money ---complicates monetary policy by making money demand unstable Financial Innovation Near Money Taylor’s Rule Allen Gr