马克思的货币概念

Money, price level, & exchange rate in the long run
• Monetary factors →price level in the long run. • An economy’s long-run equilibrium is reached if prices were perfectly flexible and always adjusted immediately to preserve full employment. • Tool: the theory of aggregate money demand.
• A permanent increase in a country’s money supply causes a proportional long-run depreciation of its currency against foreign currencies and vice versa.
R
Real money supply
M P
s
( Q )
Aggregate real
money demand
L(R,Y)
If there is an excess supply of money, then R↓ If there is an excess demand of money, then R↑
Linking money, interest rate, & exchange rate
• P375 • Simultaneous equilibrium in money market and the foreign exchange market.
③本币贬值↑ exchange
rate
Foreign exchange market ②影响本国利率
return on domestic deposit
domestic interest
expected return on foreign deposit Rates of return L (R, Y)
money supply
Money market
①本币货币供应增加
money holdings
假定：两国价格 水平与国民收入 不变。
Conclusions
• An increase in a country’s money supply causes its currency to depreciate in the foreign exchange market • A reduction in a country’s money supply causes its currency to appreciate in the foreign exchange market.
level; (Chinese presumptions)
The exchange rate is much more variable than relative price level; The price levels are relatively rigid in the short run and they will not jump in response to policy changes.
Money supply & exchange rate in the short run
• The previous assumption: price level (real output) given: • In the short run: • money supply↑→interest rate & exchange rate • In the long run: • money supply ↑→price level & exchange rate and other macroeconomic variables
exchange rate Foreign exchange market
return on domestic deposit
②本币贬值
domestic interest
①外国货币 供给增加
Rates of return L (R, Y) money supply
Money market
③本国货币市场 维持原状。
The long-run effects of money supply changes
• A change in the supply of money has no effect on the long-run values of the interest rate or real output. e.g. currency reform • A permanent increase in the money supply causes a proportional increase in price level’s long-run value. If the economy is initially at full employment, a permanent increase in the money supply eventually will be followed by a proportional increase in the price level.
R
Real money supply
M P
s
( Q )
Aggregate real
money demand
② ①
L(R,Y)
An increase in real output raises the interest rate, and vice versa, given the price level and money supply.
Empirical evidence:
Relation between Ms and P: • No proportional relationship over long period; • A clear-cut positive association between them.
Case in Industrialized Countries
P
Long term; Positive correlation; Proportional changes
Ms
Case in Latin America-time series
Strong positive relationship
Price level
Money supply
Money & Exchange Rate in the long run
1. Excess demand for output and labor; 2. Inflationary expectations; 3. Raw materials prices;
There are some exceptions of shortrun stickiness of price levels
Money Supply
M M
S
M
d
deviding
both sides by P
s
/ P L(R,Y )
Equilibrium in the money market: The money supply schedule is vertical at Ms/P because Ms is set by the central bank while P is taken as given.
Demand for money by individuals
Amount of money an individual desire to hold 1. Expected return (money and other assets) 2. Riskiness of the asset’s expected return 3. The asset’s liquidity
M
s
P
①P, Y, R can vary in the long run.
L ( R, Y )
②Price level depends on …
M
s
P
Proportional Change
L ( R,Βιβλιοθήκη BaiduY )
Remain Unchanged
• All else equal, an increase in a country’s money supply causes a proportional increase in its price level.
money supply 1. Interest rate 2. Expectation money demand Exchange rates
Money?
• Distinguish money from other assets
1. As a Medium of Exchange 2. As a Unit of Account 3. As a Store of Value
Short-run price rigidity vs. long-run price flexibility
• Prices are written into long-term contracts; • The most important prices are workers’ wages; • Workers’ wages do not enter indices of the price level directly, but they constitute the cost of production; • Wages influence the overall price level; • The short-run “stickiness” of price
R
Increase in real income Y, cause the whole demand schedule to shift upward.
L(R,Y)
For a given real income level, Y, real money demand rises as the interest rate falls.
马克思的货币概念
Money Supply
= the monetary aggregate the Federal Reserve calls M1. =the total amount of currency and checking deposits held by households and firms.
Aggregate Money Demand → →Md
1. The interest rate → → R 2. The price level → → P 3. Real national income → → Y
) Y,R(L P
) Y,R(L P
d d
M M
L(R, Y) = aggregate real money demand
Permanent money supply changes & the exchange rate
• P. 389 • Notice that the dollar depreciation is greater than it would be if the future dollar/euro exchange rate stayed fixed (as it might if the money supply increase temporary rather than permanent). If the expectation E$e/ E did not change, the new short-run equilibrium would be at point 3’ rather than at point 2’.
money holdings
Money & Money Prices
• If the price level & output are fixed in the short run, money market equilibrium:
M P
s
L(R,Y )
Money supply = Money demand
Money, Interest Rates, &
Exchange Rates
• Determination of exchange rates: 1. How interest rates are determined; 2. How expectations of future exchange rates are formed.