国际贸易与金融ii双语课程国际金融4.ppt

Disadvantages of Automatic Adjustment Mechanisms ? An efficient adjustment mechanism ? Requires central bankers to forgo their use of monetary policy ? To promote the goal of full employment without inflation ? Each nation must be willing to accept inflation or recession ? When current-account adjustment requires it 31 International Economics 国际经济学 Lectured by Yuanfen Tu School of International Trade and Economics Email:jxnctyf@126.com 1 International Economics By Robert J. Carbaugh 13th Edition Chapter 4: Mechanisms of International Adjustment Adjustment Mechanisms ? Adjustment mechanism ? Works for the return to equilibrium after the initial equilibrium has been disrupted ? Current-account adjustment ? Automatic adjustment ? Discretionary government policies ? Automatic adjustment of the current- account ? Under a fixed exchange-rate system ? Adjustment variables: prices and income 3 Balance of payments adjustments Schools of thought on adjustment ? Classical approach (1800s - early 1900s) ? Centered on gold standard ? Emphasized role of prices and interest rates ? Keynesian approach (1930s onward) ? Emphasized income changes affecting adjustment ? Monetarist approach (1960s-, Chicago school) ? Focus on role of money in changes and adjustment Balance of payments adjustments Price adjustment ? The original theory of current-account adjustment is credited to David Hume. ? Arose from concern with the prevailing mercantilist view ? A nations current account tends to move toward equilibrium automatically. Price levels is the main factors . ? Price Adjustments ? Gold standard, late 1800s to early 1900s ? Conditions for each member nation ? Money supply = gold or paper money backed by gold ? Official price of gold – defined in terms of national currency ? Buy and sell gold at that price ? Free import and export of gold ? Money supply - directly tied to current account 6 Price Adjustments ?