Bài giảng Kinh tế vĩ mô - Chương 20: Mô hình IS, LM, BP - Phan Thế Công

Nội dung text: Bài giảng Kinh tế vĩ mô - Chương 20: Mô hình IS, LM, BP - Phan Thế Công

1. 1/4/2016 TS. PHAN THẾ CÔNG The Market for Loanable Funds S = I + NFI • At the equilibrium interest rate, the amount that people want to save exactly balances the desired quantities of investment and net foreign investment. TS. PHAN THẾ CÔNG The Market for Loanable Funds • The supply of loanable funds comes from national saving (S). • The demand for loanable funds comes from domestic investment (I) and net foreign investment (NFI). TS. PHAN THẾ CÔNG The Market for Loanable Funds The supply and demand for loanable funds depend on the real interest rate. A higher real interest rate encourages people to save and raises the quantity of loanable funds supplied. The interest rate adjusts to bring the supply and demand for loanable funds into balance. 11
2. 1/4/2016 TS. PHAN THẾ CÔNG The Market for Loanable Funds Real Interest Rate Supply of loanable funds (from national saving) Equilibrium real interest rate Demand for loanable funds (for domestic investment and net foreign investment) Equilibrium Quantity of quantity Loanable Funds TS. PHAN THẾ CÔNG The Market for Loanable Funds At the equilibrium interest rate, the amount that people want to save exactly balances the desired quantities of domestic investment and net foreign investment. TS. PHAN THẾ CÔNG The Market for Foreign-Currency Exchange The two sides of the foreign-currency exchange market are represented by NFI and NX. NFI represents the imbalance between the purchases and sales of capital assets. NX represents the imbalance between exports and imports of goods and services. 12
3. 1/4/2016 TS. PHAN THẾ CÔNG The Market for Foreign-Currency Exchange In the market for foreign-currency exchange, the Chinese yuan is traded for foreign currencies. For an economy as a whole, NFI and NX must balance each other out, or: NFI = NX TS. PHAN THẾ CÔNG The Market for Foreign-Currency Exchange The price that balances the supply and demand for foreign-currency is the real exchange rate. TS. PHAN THẾ CÔNG The Market for Foreign-Currency Exchange The demand curve for foreign currency is downward sloping because a higher exchange rate makes domestic goods more expensive. The supply curve is vertical because the quantity of dollars supplied for net foreign investment is unrelated to the real exchange rate. 13
4. 1/4/2016 TS. PHAN THẾ CÔNG The Market for Foreign-Currency Exchange Real Exchange Rate Supply of RMB (from net foreign investment) Equilibrium real exchange rate Demand for RMB (for net exports) Equilibrium Quantity of RMB Exchanged quantity into Foreign Currency TS. PHAN THẾ CÔNG The Market for Foreign-Currency Exchange The real exchange rate adjusts to balance the supply and demand for RMB. At the equilibrium real exchange rate, the demand for RMB to buy net exports exactly balances the supply of RMB to be exchanged into foreign currency to buy assets abroad. TS. PHAN THẾ CÔNG Marginal Propensity to Import • The marginal propensity to import (MPm) refers to the increase in the dollar value of imports resulting from each dollar increase in the value of GDP. I M MPM GDP 14
5. 1/4/2016 TS. PHAN THẾ CÔNG Output Determination in Open Economy Expenditure Output=Expenditure C = a + bY Slope(E1 )=b E1 =C(Y) +I(r )+G E2 =C(Y) +I(r)+G-IM(Y） IM = MPM.Y E2 = a +I+G+(b-m)Y 45° Slope(E2 )=b-m 0 Output Y2 Y1 TS. PHAN THẾ CÔNG Output Determination in Open Economy Expenditure Output=Expenditure E2 =C(Y) +I(r)+G + EX(e) -IM(Y） E =C Y +I(r)+G-IM(Y） 1. An 1 ( ) increase in export 45° 0 Output Y1 Y2 2. leads to an increase in output TS. PHAN THẾ CÔNG Equilibrium Output in Open Economy • Planned aggregate expenditure in an open economy equals: E C I G EX IM In equilibrium: Y C I G EX IM Y a bY I G EX MPM.Y 1 Y .(a I G EX) 1 b MPM 15
6. 1/4/2016 TS. PHAN THẾ CÔNG The Open Economy Multiplier 1 Y (a I G EX ) 1 b m b = MPC m = MPM 1 – b + m = 1 – MPC + MPM = MPS +MPM The multiplier is: 1 Multiplier MPS MPM TS. PHAN THẾ CÔNG The Open Economy Multiplier The multiplier in the closed economy is: 1 Multiplier MPS The multiplier in the open economy is: 1 Multiplier MPS MPM TS. PHAN THẾ CÔNG The Balance of Payments The balance of payment is a statement showing all of a nation’s transactions with the rest of the world for a given period. It includes purchases and sales of goods and services, gifts, government transactions, and capital movements. 16
7. 1/4/2016 TS. PHAN THẾ CÔNG The Balance of Payments • Suppose the initial international transaction was that a Chinese company exported a plane to the U.S. for $100 million. The Chinese central bank bought $10 million for CNY 80 million. • What was Chinese balance of payments like for that year? TS. PHAN THẾ CÔNG The Balance of Payments Debit Credit Current Account Export 100,000,000 Import 0 Balance on current account 100,000,000 Capital Account Private 90,000,000 Official Reserves 10,000,000 Balance on capital account 100,000,000 TS. PHAN THẾ CÔNG The Balance of Payments Net Debits (-) or Credits (+) Current Account Export 100,000,000 Import 0 Balance on current account 100,000,000 Capital Account Private －90,000,000 Official Reserves －10,000,000 Balance on capital account － 100,000,000 Statistical Discrepancy 0 Balance of Payments 0 17
8. 1/4/2016 TS. PHAN THẾ CÔNG The Balance of Payments United States Balance of Payments, 1999 (in billion dollars) CURRENT ACCOUNT (1) Net export of goods – 347.2 (2) Net export of services 79.6 (3) Net investment income – 24.7 (4) Net transfer payments – 46.6 (5) Balance on current account (1 + 2 + 3 + 4) – 338.9 CAPITAL ACCOUNT (6) Change in private U.S. assets abroad (increase is –) – 381.0 (7) Change in foreign private assets in the United States 706.2 (8) Change in U.S. government assets abroad (increase is –) 8.3 (9) Change in foreign government assets in the U.S. 44.5 (10) Balance on capital account (6 + 7 + 8 + 9) 378.0 STATISTICAL DISCREPENCY – 39.1 BALANCE OF PAYMENTS (5 + 10 + 11) 0 TS. PHAN THẾ CÔNG The Balance of Payments • A country’s current account is the sum of its: – net exports (exports minus imports), – net income received from investments abroad, and – net transfer payments from abroad. • Exports earn foreign exchange and are a credit (+) item on the current account. Imports use up foreign exchange and are a debit (–) item. TS. PHAN THẾ CÔNG The Balance of Payments • The balance of trade is the difference between a country’s exports of goods and services and its imports of goods and services. • A trade deficit occurs when a country’s exports are less than its imports. 18
9. 1/4/2016 TS. PHAN THẾ CÔNG The Balance of Payments • Investment income consists of holdings of foreign assets that yield dividends, interest, rent, and profits paid to U.S. asset holders (a source of foreign exchange). • Net transfer payments are the difference between payments from the United States to foreigners and payments from foreigners to the United States. TS. PHAN THẾ CÔNG The Balance of Payments • The balance on current account consists of net exports of goods, plus net exports of services, plus net investment income, plus net transfer payments. It shows how much a nation has spent relative to how much it has earned. • For each transaction recorded in the current account, there is an offsetting transaction recorded in the capital account. TS. PHAN THẾ CÔNG The Balance of Payments • The capital account records the changes in assets and liabilities. • The balance on capital account in the United States is the sum of the following (measured in a given period): – the change in private U.S. assets abroad – the change in foreign private assets in U.S. – the change in U.S. government assets abroad – the change in foreign government assets in U.S. 19
10. 1/4/2016 TS. PHAN THẾ CÔNG The Balance of Payments • In the absence of errors, the balance on capital account would equal the negative of the balance on current account. • If the capital account is positive, the change in foreign assets in the country is greater than the change in the country’s assets abroad, which is a decrease in the net wealth of the country. TS. PHAN THẾ CÔNG The BP Curve The BP curve is a graph of all combinations of interest (r) and output (Y) that result in foreign exchange market equilibrium. TS. PHAN THẾ CÔNG Deriving the BP Curve Net Foreign Investment The BP Curve r r BP Curve r2 r2 E2 E2 r r 1 E 1 1 E1 NFI NFI NFI Y 2 1 Y1 Y2 20
11. 1/4/2016 TS. PHAN THẾ CÔNG Deriving the BP Equation NX EX IM (g1 m1e) (g 2 nY m2e) g nY me • n =marginal propensity to import • e =real exchange rate • g＞ 0, n ＞ 0, m ＞ 0 NFI a ( r * r ) r* =foreign interest rate r =domestic interest a ＞ 0 TS. PHAN THẾ CÔNG Deriving the BP Equation BP NX＋NFI 0 g nY me a( r * r ) 0 g m n r r * e Y a a a TS. PHAN THẾ CÔNG Deriving the BP Curve • An increase in income (GDP) increases the import, decreases the net export, in turn decreases NFI. • NFI decrease is responsive to a higher interest. NX NFI Interest GDP Import decrease decrease rate increases increase s s s increases 21
12. 1/4/2016 TS. PHAN THẾ CÔNG The BP Curve r BP Surplus BP BP＞0 A B BP Deficit BP＜0 C D F G IS Y TS. PHAN THẾ CÔNG The BP Curve • If there exists an BP surplus, the supply of foreign currencies is greater than the demand for them. Foreign currencies are likely to depreciate, while the domestic currency tends to appreciate. • If there exists an BP deficit, the demand for foreign currencies is greater than the supply. Foreign currencies are likely to appreciate, while the domestic currency tends to depreciate. TS. PHAN THẾ CÔNG Exchange Rate and BP Curve Changes r BP(e1) BP(e2) Lower exchange rate moves the BP curve rightward Y 22
13. 1/4/2016 TS. PHAN THẾ CÔNG The IS-LM-BP Model r LM BP Equilibrium E interest rate IS Equilibrium output Y TS. PHAN THẾ CÔNG The IS-LM-BP Model r LM BP1 BP2 r2 E2 r1 E 1 IS2 IS 1 Y Y1 Y2 TS. PHAN THẾ CÔNG The IS-LM-BP Model • At E1, both the goods market and money market are in equilibrium, but the foreign exchange market is not, for BP is of deficit. The demand for foreign exchange is greater than the supply. The domestic currency will depreciate. The BP curve tends to move downward • The depreciation of domestic currency will lead to more NX, thus driving the IS curve rightward. Finally the three markets reach an equilibrium at E2. 23
14. 1/4/2016 TS. PHAN THẾ CÔNG The IS-LM-BP Model r LM BP1 BP2 r2 E2 r1 E 1 IS2 IS 1 Y Y1 Y2 TS. PHAN THẾ CÔNG Fiscal Policy and IS-LM-BP in Floating Exchange Rate Context r LM E2 BP2 r2 E3 BP1 r3 r1 IS2 E 1 IS3 IS 1 Y Y1 Y3 Y2 TS. PHAN THẾ CÔNG Fiscal Policy and IS-LM-BP in Floating Exchange Rate Context • An expansionary fiscal policy moves the IS curve rightward, and the goods market and money market is in equilibrium at E2. • At E2, there exists BP surplus in the foreign exchange market, the domestic currency tends to appreciate. • The appreciation will decrease the NX, and thus pushing IS curve leftward until E3. 24
15. 1/4/2016 TS. PHAN THẾ CÔNG Fiscal Policy and IS-LM-BP in Floating Exchange Rate Context r LM E2 BP2 r2 E3 BP1 r3 r1 IS2 E 1 IS3 IS 1 Y Y1 Y3 Y2 TS. PHAN THẾ CÔNG Fiscal Policy and IS-LM-BP in Floating Exchange Rate Context • In the open economy, the expansionary fiscal policy has crowding-out effect not only on the domestic investment, but on net export. • Therefore, the multiplier effect of expansionary fiscal policy is not significant. In Japan, for example, the multiplier is estimated to be only 1.2. TS. PHAN THẾ CÔNG Monetary Policy and IS-LM-BP in Floating Exchange Rate Context r LM1 LM2 BP1 BP2 r1 E1 r3 E3 r2 E2 IS2 IS 1 Y Y1 Y2 Y3 25
16. 1/4/2016 TS. PHAN THẾ CÔNG Monetary Policy and IS-LM-BP in Floating Exchange Rate Context • If the central bank effects an expansionary monetary policy, the LM curve moves to the right. • The goods market and money market are of equilibrium at E2, but the foreign exchange market faces a BP deficit—demand for foreign currency is greater than supply. • The domestic currency tends to depreciate, which moves the BP curve downward. TS. PHAN THẾ CÔNG Monetary Policy and IS-LM-BP in Floating Exchange Rate Context r LM1 LM2 BP1 BP2 r1 E1 r3 E3 r2 E2 IS2 IS 1 Y Y1 Y2 Y3 TS. PHAN THẾ CÔNG Monetary Policy and IS-LM-BP in Floating Exchange Rate Context • The depreciation of domestic currency encourages export, thus moving the IS curve rightward. • The open economy equilibrate at E3. • In the open economy, the monetary policy is very effective. 26
17. 1/4/2016 TS. PHAN THẾ CÔNG Fiscal Policy and IS-LM-BP in Fixed Exchange Rate Context r LM1 LM2 r2 BP E r3 2 E3 r1 E1 IS2 IS 1 Y Y1 Y2 Y3 TS. PHAN THẾ CÔNG Fiscal Policy and IS-LM-BP in Fixed Exchange Rate Context • Suppose the government adopts an expansionary policy, the IS curve moves rightward. • At E2, the goods and money markets reach an equilibrium, but the foreign exchange market does not. There exists the BP surplus. As a result, the domestic currency appreciate. TS. PHAN THẾ CÔNG Fiscal Policy and IS-LM-BP in Fixed Exchange Rate Context r LM1 LM2 r2 BP E r3 2 E3 r1 E1 IS2 IS 1 Y Y1 Y2 Y3 27
18. 1/4/2016 TS. PHAN THẾ CÔNG Fiscal Policy and IS-LM-BP in Fixed Exchange Rate Context • Since the rates between currencies should remain fixed, the central bank is obliged to buy foreign currencies. • The purchase of foreign currencies increases the supply of domestic currency, shifting the LM curve right. • Fiscal policies in the fixed exchanged foreign rate context are effective. TS. PHAN THẾ CÔNG Monetary Policy and IS-LM-BP in Fixed Exchange Rate Context r LM1 LM2 BP E1 r1 E2 r2 IS Y Y1 Y2 TS. PHAN THẾ CÔNG Monetary Policy and IS-LM-BP in Fixed Exchange Rate Context • If the central bank increases its money supply, the LM curve shifts right. • At E2, the goods and money market are of equilibrium, while the foreign exchange market isn’t, for there exists an BP deficit. • The strong demand for foreign currencies will lead to the depreciation of domestic currencies. 28
19. 1/4/2016 TS. PHAN THẾ CÔNG Monetary Policy and IS-LM-BP in Fixed Exchange Rate Context r LM1 LM2 BP E1 r1 E2 r2 IS Y Y1 Y2 TS. PHAN THẾ CÔNG Monetary Policy and IS-LM-BP in Fixed Exchange Rate Context • To keep the fixed exchange rates constant, the central bank has to sell foreign currencies it holds as reserves. • The selling of foreign currencies means the reduction of money supply, this will bring back the LM curve. • So monetary policies in the open economy is of little or even no effect. TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates Fixed exchange rates: The BP curve 29
20. 1/4/2016 TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates r BP SURPLUS r1 DEFICIT O Y TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates r SURPLUS BP DEFICIT O Y1 Y TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates r BP a r1 O Y1 Y 30
21. 1/4/2016 TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates r Assume that national income rises BP a r1 O Y1 Y1 Y TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates r Assume that national income rises BP a b r1 Deficit if rate of interest remains at r1 O Y1 Y1 Y TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates r BP c r2 a r1 Rate of interest must rise to r2 to restore balance of payments O Y1 Y1 Y 31
22. 1/4/2016 TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates Full equilibrium in the goods, money and foreign exchange markets TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates r LM BP a r1 IS O Y1 Y Full equilibrium in the goods, money and foreign exchange markets TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates Effect of an expansionary fiscal policy under fixed exchange rates 32
23. 1/4/2016 TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates r LM1 b r2 BP a r1 IS2 IS1 O Y 1 Y2 Y An expansionary fiscal policy TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates r LM1 b r2 BP Balance of payments a surplus causes money r1 supply to expand IS2 IS1 O Y 1 Y2 Y An expansionary fiscal policy TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates r LM1 LM2 b r2 BP c r3 a Restoration of r1 full equilibrium IS2 IS1 O Y 1 Y2 Y3 Y An expansionary fiscal policy 33
24. 1/4/2016 TS. PHAN THẾ CÔNG ISLMBP analysis: fixed exchange rates r BP LM1 a r1 IS2 IS1 O Y1 Y An expansionary fiscal policy: BP curve steeper than LM curve TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates r BP LM1 b r2 a r1 IS2 IS1 O Y 1 Y2 Y An expansionary fiscal policy: BP curve steeper than LM curve TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates r BP LM1 b r2 Balance of payments a deficit causes money r1 supply to contract IS2 IS1 O Y 1 Y2 Y An expansionary fiscal policy: BP curve steeper than LM curve 34
25. 1/4/2016 TS. PHAN THẾ CÔNG ISLMBP analysis: fixed exchange rates r BP LM2 LM c 1 r3 b r 2 Restoration of a full equilibrium r1 IS2 IS1 O Y 1 Y3 Y2 Y An expansionary fiscal policy: BP curve steeper than LM curve TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates Effect of an expansionary monetary policy under fixed exchange rates TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates r LM1 BP a r1 IS O Y1 Y An expansionary monetary policy 35
26. 1/4/2016 TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates r LM1 LM2 BP a r1 b r2 IS O Y1 Y2 Y An expansionary monetary policy TS. PHAN THẾ CÔNG IS-LM-BP analysis: fixed exchange rates r LM1 LM2 BP a r1 Balance of payments b deficit causes money r 2 supply to contract again IS O Y1 Y2 Y An expansionary monetary policy TS. PHAN THẾ CÔNG ISLMBP analysis: fixed exchange rates r LM1 LM2 BP a r1 Full equilibrium b is restored r 2 back at point a IS O Y1 Y2 Y An expansionary monetary policy 36
27. 1/4/2016 TS. PHAN THẾ CÔNG ISLMBP analysis: fixed exchange rates Floating exchange rates: The BP curve TS. PHAN THẾ CÔNG ISLMBP analysis: floating exchange rates r Appreciation SURPLUS BP O Y TS. PHAN THẾ CÔNG ISLMBP analysis: floating exchange rates r BP Depreciation DEFICIT O Y 37
28. 1/4/2016 TS. PHAN THẾ CÔNG ISLMBP analysis: fixed exchange rates Effect of an expansionary fiscal policy under floating exchange rates TS. PHAN THẾ CÔNG ISLMBP analysis: floating exchange rates r LM b r BP 2 a r 1 IS2 IS1 O Y1 Y2 Y An expansionary fiscal policy TS. PHAN THẾ CÔNG ISLMBP analysis: floating exchange rates r LM b r BP 2 a r 1 IS IS1 2 Balance of payments surplus causes the exchange rate to appreciate O Y1 Y2 Y An expansionary fiscal policy 38
29. 1/4/2016 TS. PHAN THẾ CÔNG ISLMBP analysis: floating exchange rates r LM b r BP 2 The appreciation a causes the IS curve r to shift to the left 1 IS IS1 2 O Y1 Y2 Y An expansionary fiscal policy TS. PHAN THẾ CÔNG IS-LM-BP analysis: floating exchange rates r LM b BP2 r BP c 1 2r Full equilibrium is 3 a r restored at point c 1 IS2 IS3 IS1 O Y1 Y3 Y2 Y An expansionary fiscal policy TS. PHAN THẾ CÔNG IS-LM-BP analysis: floating exchange rates r BP1 LM b r a 2r 1 IS2 IS1 O Y1 Y2 Y An expansionary fiscal policy: BP curve steeper than LM curve 39
30. 1/4/2016 TS. PHAN THẾ CÔNG IS-LM-BP analysis: floating exchange rates r BP1 LM b r a Balance of payments 2r deficit causes exchange 1 rate to depreciate IS2 IS1 O Y1 Y2 Y An expansionary fiscal policy: BP curve steeper than LM curve TS. PHAN THẾ CÔNG IS-LM-BP analysis: floating exchange rates r BP1 LM b Depreciation causes r a 2r the IS curve to 1 shift to the right IS2 IS1 O Y1 Y2 Y An expansionary fiscal policy: BP curve steeper than LM curve TS. PHAN THẾ CÔNG ISLMBP analysis: floating exchange rates r BP1 BP2 LM r c Full equilibrium is 3r b a achieved at point c 2r 1 IS3 IS2 IS1 O Y1 Y2 Y3 Y An expansionary fiscal policy: BP curve steeper than LM curve 40