andInflation宏觀經(jīng)濟學(xué)-加州大學(xué)-詹姆斯·布拉德

1、CHAPTER 8Money, Prices, and Inflation1QuestionsWhat do economists mean by “money”?Why is money useful?What do economists mean when they say that money is a unit of account?What determines the price level and the inflation rate?2QuestionsWhy would a government ever generate “hyperinflation”?What dete

2、rmines the level of money demand?What determines the level of the money supply?Why is inflation seen as something to be avoided?3InflationIn the 1970s, the United States experienced an episode of relatively mild inflationprices rose between five and ten percent per yearcaused significant economic an

3、d political traumaavoiding a repeat of the inflation of the 1970s remains a major goal of economic policy4Figure 8.1 - Post-World War II Inflation in the United States, 1951-20005The Flexible-Price ModelThe Classical dichotomy implies that real variables (real GDP, real investment spending, or the r

4、eal exchange rate) can be analyzed and calculated without considering nominal variables (price level)money is “neutral”This is a special feature of the full-employment flexible-price model6Moneyis wealth that is held in a readily-spendable formis made up ofcoin and currencychecking account balanceso

5、ther assets that can be turned into cash or demand deposits nearly instantaneously, without risk or cost7The Usefulness of MoneyWithout money, market transactions would have to be performed through barterIn a barter economy, market exchange would require the coincidence of wantsyou would have to hav

6、e some good or service that someone wants and he or she would have to have some good or service that you want8Figure 8.2 - Coincidence of Wants9The Usefulness of MoneyMoney also serves as a unit of accountmoney is used as a yardstick to measure value or quote pricesAnything that alters the real valu

7、e of money in terms of its purchasing power will also alter the real terms of existing contracts that use the money as a unit of account10The Demand for MoneyBusinesses and households have a demand for moneythey want to hold a certain amount of wealth in the form of readily-spendable purchasing powe

8、r to carry out transactionsa higher level of spending means a larger money demandThere is a cost of holding moneycash and checking deposits earn little or no interest11Figure 8.3 - Reasons for and Opportunity Cost of Holding Money12The Quantity Theory of Moneyassumes that the only important determin

9、ant of the demand for money is the flow of spendingcan be summarized usingthe Cambridge money-demand functionthe quantity equation13The Quantity Theory of Money(P Y) represents the total nominal flow of spendingM is the quantity of moneyV is a measure of how fast money moves through the economyhow m

10、any times the average unit of money is used to buy a final good or service14Figure 8.4 - The Velocity of Money15Determining the Price LevelIn the flexible-price model of the macroeconomyreal GDP (Y) is equal to potential GDP (Y*)the velocity of money is determined by the sophistication of the bankin

11、g systemthe money supply is determined by the central bank16Determining the Price LevelIf the price level is higher than the quantity equation predictshouseholds and businesses will have less wealth in the form of money than they wishthey will cut back on purchasessellers will note demand is weak an

12、d lower prices17Determining the Price LevelIf the price level is lower than the quantity equation predictshouseholds and businesses will have more wealth in the form of money than they wishthey will increase purchasessellers will note demand is strong and raise prices18Determining the Price LevelExa

13、mple (third quarter of 1998)real GDP = $7,566 billionmoney stock = $1,072 billionvelocity = 7.964In the third quarter of 1998, the price level was equal to 112.84% of its 1992 level19The Money StockThe Federal Reserve determines the money stock in the U.S.the determination of the money stock is the

14、basic task of monetary policyThe Federal Reserve can directly impact the monetary basethe sum of currency in circulation and deposits at the Federal Reserves twelve branches20The Money StockTo reduce the monetary base, the Federal Reserve sells short-term government securitiesTo increase the monetar

15、y base, the Federal Reserve buys short-term government securitiesThese transactions are called open market operations21Figure 8.5 - Open Market Operations22The Money StockThe Federal Reserve directly controls the monetary baseThe other measures of the money stock are determined by the interaction of

16、 the monetary base with the banking sectorregulatory requirementsthe incentive of financial institutions to have enough funds on hand to satisfy depositors demands23The Money StockBesides the monetary base (H), there are other definitions of the money stock such asM1 (currency, checking accounts, tr

17、avelers checks)M2 (M1 plus savings accounts, small term deposits, money held in money market accounts)M3 (M2 plus large term deposits and institutional money market balances)24Table 8.1 - Measures of the Money Stock25InflationThe inflation rate is the proportional rate of change in the price levelSi

18、ncethe inflation rate () will bev=growth rate of velocitym=growth rate of the money stocky=growth rate of real GDP26InflationExamplegrowth rate of real GDP=4% per yeargrowth rate of velocity=2% per yeargrowth rate of the money stock=5% per year27InflationThe bulk of changes in the rate of inflation

19、are due to changes in the growth rate of the money stockthe growth rate of the money stock (m) can change quickly and substantiallychanges in the growth rates of real GDP (y) and velocity (v) are generally smaller28InflationIn the real world, inflation is not always proportional to money growthin th

20、e 1980s, both inflation and velocity fell sharply but the money stock grewin the first half of the 1990s, velocity fellmeant that high growth of the money stock did not lead to high inflationin the second half of the 1990s, velocity grewmoney supply growth was negative to keep inflation from rising2

21、9Figure 8.6 - Money Growth and Inflation Are Not Always Parallel30Money DemandEconomic theory implies that money demand should be inversely related to the nominal interest ratecash and checking account balances earn little or no interestthe purchasing power of money erodes at the rate of inflationth

22、e expected real return on money is -e31Money DemandThe opportunity cost of holding money is the difference between the rate of return on other assets (r) and the rate of return on money (-e)the opportunity cost of holding money is the nominal interest rate i=r+eAs the opportunity cost of holding mon

23、ey (i) rises, the quantity of money balances demanded falls32Figure 8.7 - Money Demand and theInflation Rate33Money DemandThe velocity of money can be represented byVL represents the financial technology-driven trend in velocityV0+Vi(r+e) represents the dependence of the demand for money on the nomi

24、nal interest rate34Money DemandThe demand for nominal money balances is35Money, Prices, and InflationSuppose that the rate of growth of the money stock permanently increasesthe inflation rate will riseif the real interest rate is stable, the opportunity cost of holding money will risethe velocity of

25、 money will increaseif the money stock and real GDP remain fixed, the price level will jump suddenly and discontinuously36Figure 8.8 - Effects of a Rise in Money Growth37The Costs of InflationThe costs of expected inflation are smallrequires you to make more trips to the bankfirms must spend resourc

26、es changing their priceshouseholds find it difficult to determine a good deal from a bad oneour tax laws are not designed to deal well with inflation38The Costs of InflationThe costs of unexpected inflation are more significantredistributes wealth from creditors to debtorscreditors receive less purc

27、hasing power than they had anticipateddebtors find the payments they must make less burdensome than they had expected39Hyperinflationoccurs when inflation rises to more than 20 percent per montharises when governments attempt to obtain extra revenue by printing moneyfinancing its spending by levying

28、 a tax on holdings of cashknown as an inflation tax40Figure 8.9 - The Inflation Tax41HyperinflationEventually prices rise so rapidly that the monetary system breaks downpeople would rather deal in barter termsReal GDP begins to fallthe economy loses the benefits of the division of laborIn the end, t

29、he currency becomes worthless42Chapter SummaryBy “money” economists mean something special: wealth in the form of readily-spendable purchasing powerWithout money it is hard to imagine how our economy could successfully functionthe fact that everyone will accept money as payment for goods and services is necessary for the market economy to function43Chapter SummaryMoney is not only a medium of exchange, it is also a unit of account: a yardstick that we use to measure values and to specify contracts44Chapter SummaryMoney demand is determined bybusinesses and households desire to hold wealth