(8)-Pugel-16e-Chapter23外匯市場國際金融

Chapter23:InternalandExternalBalancewithFixedExchangeRatesFixedExchangeRates:OfficialInterventionUnderafixedexchangerateregime,thegovernmentmustdefendthatrate.Thefirstlineofdefenseisofficialintervention:Themonetaryauthority(thecentralbank)buysorsellsforeigncurrencyintheforeignexchangemarketasnecessarytokeeptheexchangeratewithintheallowablebandaroundthepeggedexchangeratevalue.?2016McGraw-HillEducation.AllRightsReserved.2AssetsandLiabilitiesoftheCentralBank?2016McGraw-HillEducation.AllRightsReserved.3CentralBankAssetsThetwokeytypesofassetsaredomesticassets(D)andinternationalreserves(R)Domesticassets(denominatedindomesticcurrency)includebondsandsimilardebtsecuritiesandloansthatthecentralbankhasmadetodomesticfinancialinstitutionsInternationalreservesincludeholdingsofforeigncurrencyandforeign-currency-denominatedsecurities.?2016McGraw-HillEducation.AllRightsReserved.4CentralBankLiabilitiesOntheliabilitysideofthebalancesheetthetwoliabilitiesofinterestare:Domesticcurrency:papermoneyandcoinissuedbythecentralbankDepositsfrom(Regular)Banks:Thesearedepositsthatcountry’sdomesticbankshaveplacedwiththecentralbankTogethertheseare:Monetarybase(MB)=Currency+Bankdepositsatthecentralbank?2016McGraw-HillEducation.AllRightsReserved.5KeyBalance-SheetItems,theFedandtheECB,December31,2013?2016McGraw-HillEducation.AllRightsReserved.6

MonetaryBaseandMoneySupply

Thecountry’smoneysupplyconsists(mainly)ofcurrencyheldbythepublicandvarioustypesofdepositsheldbythepublicatregularbanks.Bankreserves(currencyheldbybanksandbankdepositsatthecentralbank)backupthepublic’sbankdeposits.Thecentralbankcancontrolthecountry’smoneysupplybycontrollingitsownbalancesheet(themonetarybase)andbysettingreserverequirementsthatbanksmustmeet.Wecanusetheserelationshipstoseetheeffectsofofficialinterventiononthecountry’smoneysupply.?2016McGraw-HillEducation.AllRightsReserved.7FromtheBalanceofPaymentstotheMoneySupplyIfthecountryhasanofficialsettlementbalancesurplus,sothattheexchange-ratevalueofthecountry’scurrencyisexperiencingupwardpressure,thecentralbankmustintervenetobuyforeigncurrencyandselldomesticcurrency.Thiswillhavethefollowingeffectsonthecentralbank’sbalancesheet:AnincreaseinofficialinternationalreserveholdingssothatRwillrise.Anincreaseinitsliabilities,probablyanincreaseinbankdepositsatthecentralbank.Themonetarybaseincreases,andthecountry’smoneysupplytendstoincrease.?2016McGraw-HillEducation.AllRightsReserved.8FromtheBalanceofPaymentstotheMoneySupplyIfthecountry’sofficialsettlementbalanceisindeficitandtheexchangevalueofthecountry’scurrencyisunderdownwardpressure,thecentralbankmustintervenetosellforeigncurrencyandbuydomesticcurrency.Thiswillhavethefollowingeffectsonthecentralbank’sbalancesheet:Adecreaseinofficialinternationalreserves(Rfalls)Adecreaseinitsliabilities,probablyadecreaseinbankdepositsatthecentralbank.Themonetarybasedecreases,andthecountry’smoneysupplytendstodecrease.?2016McGraw-HillEducation.AllRightsReserved.9FromtheMoneySupplyBacktotheBalanceofPaymentsIfthecountrybeginswithasurplusinitsoverallbalance,thesurplusrequiresthecentralbanktobuyforeigncurrencyandselldomesticcurrency.Asthecentralbankincreasesthemonetarybase(bankreserves),ittendstoreduceinterestrates.Thelowerinterestrateswillhaveseveraleffectsonthecountry’sbalanceofpayments.?2016McGraw-HillEducation.AllRightsReserved.10ExpandingtheMoneySupplyWorsenstheBalanceofPaymentswithFixedRates?2016McGraw-HillEducation.AllRightsReserved.11PaymentsAdjustmentsforaSurplusCountrywithFixedRates?2016McGraw-HillEducation.AllRightsReserved.12FromtheMoneySupplyBacktotheBalanceofPaymentsIfthecountryinsteadbeginswithadeficitinitsofficialsettlementbalanceanddownwardpressureontheexchangevalueofitscurrency,thenalltheseeffectsworkinreversedirection.Keyconclusion:Underafixedexchangerateregime,ifanexternalimbalanceexists,centralbankinterventiontodefendthefixedrate“automatically”changesthedomesticmoneysupply.Themoneysupplychangecausesadjustmentsthatmovetheeconomybacktowardexternalbalance.?2016McGraw-HillEducation.AllRightsReserved.13SterilizationThecentralbankcankeeptheexternalsurplusordeficitfromhavinganimpactonthedomesticmoneysupplybytakingoffsettingactions.Sterilization

isactionbythecentralbanktoreversetheeffectsofofficialinterventiononthedomesticmoneysupply.?2016McGraw-HillEducation.AllRightsReserved.14SterilizationIfthecentralbankisinterveningtodefendthefixedexchangerateinasituationofbalanceofpaymentssurplusbysellingdomesticcurrencyinexchangeforforeigncurrency,themonetarybaseandthemoneysupplywouldincrease.Thisprocesscanbesterilizedifthecentralbankundertakes,forexample,anopenmarketoperationbysellingdomesticgovernmentbonds.Bycollectingpaymentforthebonds,thecentralbankreducesthemonetarybase.?2016McGraw-HillEducation.AllRightsReserved.15Full/CompleteSterilizationBecauseacompletelysterilizedinterventiondoesnotchangethedomesticmoneysupply,theLMcurvedoesnotchange.Startingfromasituationofsurplus(orofdeficit)inthebalanceofpayment,therewillbenoadjustmenttowardexternalbalance.?2016McGraw-HillEducation.AllRightsReserved.16MonetaryPolicywithFixedExchangeRatesFixedexchangeratesgreatlyconstrainacountry’sabilitytopursueanindependentmonetarypolicy.Thisisbecausethecountry’smonetarypolicymustbeconsistentwithmaintainingthevalueofthefixedexchangerate.?2016McGraw-HillEducation.AllRightsReserved.17ExpansionaryMonetaryPolicywithFixedRates?2016McGraw-HillEducation.AllRightsReserved.18HowExpansionaryFiscalPolicyAffectstheBalanceofPaymentswithFixedRates?2016McGraw-HillEducation.AllRightsReserved.19FiscalPolicywithFixedExchangeRatesTheeffectivenessoffiscalpolicywilldependontheresponsivenessofcapitalflowstotheinterestratechangesfollowingafiscalpolicyIfcapitalflowsareverysensitivetointerestratechanges(highcapitalmobility),thenthecapitalflowswillbeverylarge,andtheofficialsettlementsbalancewillgointosurplusIfcapitalflowsareunresponsive(lowcapitalmobility),thenthefinancialaccountwillonlyimprovealittle,andtheoverallbalancewillgointodeficit?2016McGraw-HillEducation.AllRightsReserved.20ExpansionaryFiscalPolicywithFixedExchangeRates?2016McGraw-HillEducation.AllRightsReserved.21PerfectCapitalMobilityApracticallyunlimitedamountofinternationalfinancialcapitalflowsinresponsetotheslightestchangeinonecountry’sinterestrates.Perfectcapitalmobilitywithfixedexchangerates:MakesitimpossibleformonetarypolicytoinfluenceinterestratesorthedomesticeconomyMakesfiscalpolicypowerfulinaffectingdomesticproduct(fullspendingmultipliereffect)?2016McGraw-HillEducation.AllRightsReserved.22WithPerfectCapitalMobility,MonetaryPolicyIsImpotentbutFiscalPolicyisStrong?2016McGraw-HillEducation.AllRightsReserved.23ShockstotheEconomyInternalshocksDomesticmonetaryshocksDomesticspendingshocksInternationalcapital-flowshocksInternationaltradeshocks?2016McGraw-HillEducation.AllRightsReserved.24InternalShock:MonetaryAdomesticmonetaryshockalterstheequilibriumrelationshipbetweenmoneysupplyandmoneydemand.Achangeinmoneysupply,orachangeindemandformoney,willcauseashiftinLMcurve.Underfixedexchangerates,monetaryshockswillhavelimitedeffectsondomesticinterestrates.ThisisbecauseashiftinLMcurvetendstoreverseitselfasthecentralbankmustintervenetodefendthefixedexchangerate.?2016McGraw-HillEducation.AllRightsReserved.25InternalShock:SpendingAdomesticspendingshockareexogenouschangesindomesticrealspendingongoodsandservices.Examplesincludeachangeinfiscalpolicyandexogenouschangesinconsumerspendingorinvestment.Theeffectofthiskindofshockondomesticproductdependsonwhichchangesmore,internationalcapitalflowsorthecountry’scurrentaccount,becauseoftheimplicationsforofficialinterventionintheforeignexchangemarket.?2016McGraw-HillEducation.AllRightsReserved.26InternationalCapitalFlowShockAninternationalcapital-flowshockisachangeintheflowofinternationallymobilefundsinresponsetosucheventsasachangeintheforeigninterestrates,rumorsaboutpoliticalchanges,ornewrestrictions(capitalcontrols)oninternationalassetholdings.Altersthecountry’sfinancialaccountbalance.TheFEcurveshifts.?2016McGraw-HillEducation.AllRightsReserved.27AnAdverseInternationalCapital-FlowShock?2016McGraw-HillEducation.AllRightsReserved.28InternationalTradeShockAninternationaltradeshockisachangeinacountry’sexportsorimportsthatarisesfromcausesotherthanchangesinrealincomeofthecountry.Altersboththecountry’scurrentaccountbalanceandaggregatedemandforthecountry’sdomesticproduction.BoththeFEcurveandtheIScurveshift.?2016McGraw-HillEducation.AllRightsReserved.29AnAdverseInternationalTradeShock?2016McGraw-HillEducation.AllRightsReserved.30PoliciesforInternalandExternalBalance?2016McGraw-HillEducation.AllRightsReserved.31ImbalancesandPolicyResponsesAcountrywantstoachievebothinternalbalanceandexternalbalance.Yetitsactualperformanceisoftenshortthesegoals.Thegovernmentofacountryinoneofthetwodilemmacases(deficitandhighunemployment,orsurplusandrapidinflation)hasthreebasicchoices:Abandonthegoalofexternalbalance(abandonthefixedexchangerate)Abandonthegoalofinternalbalance,atleastintheshortrun,andsetitspoliciestoachieveexternalbalanceTrytofindmorepolicytools,orcreativelyusethetoolstheyalreadyhave?2016McGraw-HillEducation.AllRightsReserved.32AShort-RunSolution:Monetary-FiscalMixThereisawaytoachievebothinternalandexternalbalancegoalsusingconventionaldemand-sidepolicieswhilestayingonfixedexchangerates.Monetaryandfiscalpoliciescanbemixedsoastoachieveanycombinationofdomesticproductandoverallpaymentsbalanceintheshortrun.Assigntofiscalpolicythetaskofstabilizingthedomesticeconomy,andassigntomonetarypolicythetaskofstabilizingthebalanceofpayments.?2016McGraw-HillEducation.AllRightsReserved.33HowMonetaryandFiscalPolicyCouldCombinetoCureBothUnemploymentandaBalance-of-PaymentsDeficit?2016McGraw-HillEducation.AllRightsReserved.34Monetary-FiscalRecipesforInternalandExternalBalance?2016McGraw-HillEducation.AllRightsReserved.35Surrender:ChangingtheExchangeRateIfanimbalanceinacountry’soverallbalanceofpaymentsislargeenoughorlastslongenough,thecountry’sgovernmentmaybeunwillingtochangedomesticpoliciesbyenoughtoeliminatetheimbalanceThecountry’sgovernmentmayconcludethatsurrenderingthefixedrateisthebestchoiceavailableIfthebalanceofpaymentsisindeficit,adevaluationmaybeused;ifit’sinsurplus,revaluationmayoccur?2016McGraw-HillEducation.AllRightsReserved.36DevaluationoftheCountry’sCurrency?2016McGraw-HillEducation.AllRightsReserved.37ExchangeRateMechanism(ERM)-ThreeCountries?2016McGraw-HillEducation.AllRightsReserve