宏观经济学英文教学课件：chapter05 The Open Economy

CHAPTERFIVETheOpenEconomyslide1Chapterobjectivesaccountingidentitiesfortheopeneconomysmallopeneconomymodelwhatmakesit“small”howthetradebalanceandexchangeratearedeterminedhowpoliciesaffecttradebalance&exchangerateslide2PercentageofGDP4035302520151050CanadaFranceGermanyItalyJapanU.K.U.S.ImportsExportsImportsandExports

asapercentageofoutput:2000slide3Inanopeneconomy,spendingneednotequaloutputsavingneednotequalinvestmentslide4PreliminariesEX=exports=

foreignspendingondomesticgoodsIM=imports=C

f

+I

f

+G

f

=spendingonforeigngoodssuperscripts:d= spendingondomesticgoodsf= spendingonforeigngoodsslide5Preliminaries,cont.NX=netexports(a.k.a.the“tradebalance”)

=EX–IMIfNX>0,

countryhasatradesurplus

equaltoNXIfNX<0,

countryhasatradedeficit

equalto–

NXslide6GDP=expenditureon

domesticallyproducedg&sslide7Thenationalincomeidentity

inanopeneconomyY=C+I+G+NXor,NX

=Y

–

(C

+I

+G

)netexportsdomesticspendingoutputslide8InternationalcapitalflowsNetcapitaloutflowsS–Inetoutflowof“loanablefunds”netpurchasesofforeignassets

thecountry’spurchasesofforeignassets

minusforeignpurchasesofdomesticassetsWhenS>I,countryisanetlenderWhenS<I,countryisanetborrowerslide9AnotherimportantidentityNX

=Y

–

(C

+I

+G

)implies

NX=(Y

–C

–G

)–I

=S–Itradebalance=netcapitaloutflowsslide10SavingandInvestment

inaSmallOpenEconomyAnopen-economyversionoftheloanablefundsmodelfromchapter3.Includesmanyofthesameelements:slide11NationalSaving:

TheSupplyofLoanableFundsrS,IAsinChapter3,

nationalsavingdoesnotdependontheinterestrateslide12Assumptionsre:capitalflowsdomestic&foreignbondsareperfectsubstitutes(samerisk,maturity,etc.)

perfectcapitalmobility:

norestrictionsoninternationaltradeinassetseconomyissmall:

cannotaffecttheworldinterestrate,denotedr*a&bimplyr=r*cimpliesr*

isexogenousslide13Investment:

TheDemandforLoanableFundsInvestmentisstilla

downward-slopingfunction

oftheinterestrate,r

*buttheexogenous

worldinterestrate……determinesthe

country’slevelof

investment.I

(r*

)rS,II

(r

)slide14Iftheeconomywereclosed…rS,II

(r

)rc…theinterestratewouldadjustto

equate

investment

andsaving:slide15Butinasmallopeneconomy…rS,II

(r

)rcr*I

1theexogenousworldinterestratedeterminesinvestment……andthedifferencebetweensavingandinvestmentdeterminesnetcapitaloutflowsandnetexportsNXslide16Threeexperiments1. Fiscalpolicyathome2. Fiscalpolicyabroad3. Anincreaseininvestmentdemandslide171.FiscalpolicyathomerS,II

(r

)I

1AnincreaseinGordecreaseinTreducessaving.NX1NX2Results:

slide18NXandtheGovernmentBudgetDeficitBudgetdeficit

(rightscale)Netexports

(leftscale)2000年的时候美国经济长期繁荣，政府收入增加，进口增加，导致净出口减小。另一解释是美国文化改变，开始借钱消费，slide192.FiscalpolicyabroadrS,II

(r

)Expansionaryfiscalpolicyabroadraisestheworldinterestrate.NX1NX2Results:

2000年的时候美国经济长期繁荣，政府收入增加，进口增加，导致净出口减小。另一解释是美国文化改变，开始借钱消费，slide203.AnincreaseininvestmentdemandrS,II

(r

)1EXERCISE:UsethemodeltodeterminetheimpactofanincreaseininvestmentdemandonNX,S,I,andnetcapitaloutflow.NX1I

1Sslide213.AnincreaseininvestmentdemandrS,II

(r

)1ANSWERS:I>0,S=0,netcapitaloutflowsandnetexports

fallbytheamountI

NX2NX1I

1I

2SI

(r

)2slide22Thenominalexchangeratee= nominalexchangerate,

therelativepriceof

domesticcurrency

intermsofforeigncurrency (e.g.YenperDollar)名义汇率，实际汇率，购买力评价汇率。国际货币基金组织网站上有slide23ExchangeratesasofJune6,2002countryexchangerateEuro1.06Euro/$Japan124.3Yen/$Mexico9.7Pesos/$Russia31.4Rubles/$SouthAfrica9.8Rand/$Turkey1,444,063.1Liras/$U.K.0.68Pounds/$直接标价：6.2rmb买1美元间接标价：1/6.2,好处是rmb升值则这个值变大slide24Therealexchangerate

= realexchangerate,

therelativepriceof

domesticgoods

intermsofforeigngoods (e.g.JapaneseBigMacsperU.S.BigMac)thelowercaseGreekletterepsilonε通过相对价格调整，这个价格是同一时点不同国家的物价水平slide25Understandingtheunitsofεε理论上埃普西隆的值应该是1，如果大于一，则本国物价太低或者本币被低估slide26onegood:BigMacpriceinJapan:

P*=200YenpriceinUSA:

P=$2.50nominalexchangerate

e=120Yen/$TobuyaU.S.BigMac,someonefromJapan

wouldhavetopayanamountthatcouldbuy

1.5JapaneseBigMacs.ε~McZample~slide27ε

intherealworld&ourmodelIntherealworld:

Wecanthinkofεastherelativepriceof

abasketofdomesticgoodsintermsofabasketofforeigngoodsInourmacromodel:

There’sjustonegood,“output.”

Soεistherelativepriceofonecountry’soutputintermsoftheothercountry’soutputslide28HowNX

dependsonε

ε

U.S.goodsbecomemoreexpensiverelativetoforeigngoods

EX,IM

NXslide29U.S.NetExportsandthe

RealExchangeRate,1975-2002slide30ThenetexportsfunctionThenetexportsfunctionreflectsthisinverserelationshipbetweenNXandε:

NX=NX

(ε

)slide31TheNXcurvefortheU.S.0NXεNX(ε)ε1Whenεisrelativelylow,

U.S.goodsarerelativelyinexpensiveNX(ε1)soU.S.netexportswill

behighslide32TheNXcurvefortheU.S.0NXεNX(ε)ε2Athighenoughvaluesof

ε,

U.S.goodsbecomesoexpensivethatNX(ε2)weexportlessthanweimportslide33HowεisdeterminedTheaccountingidentitysaysNX=S

-

IWesawearlierhowS

-

Iisdetermined:Sdependsondomesticfactors(output,fiscalpolicyvariables,etc)Iisdeterminedbytheworldinterest

rater

*So,ε

mustadjusttoensureslide34HowεisdeterminedNeitherS

norIdependonε,

sothenetcapitaloutflowcurveisvertical.εNXNX(ε

)εadjuststoequateNX

withnetcapitaloutflow,S

-

I.ε

1NX

1slide35Interpretation:supplyanddemandintheforeignexchangemarketdemand:

ForeignersneeddollarstobuyU.S.netexports.εNXNX(ε

)supply:Thenetcapitaloutflow(S

-

I

)

isthesupplyofdollarstobeinvestedabroad.ε

1NX

1slide36Fourexperiments1. Fiscalpolicyathome2. Fiscalpolicyabroad3. Anincreaseininvestmentdemand4. Tradepolicytorestrictimportsslide371.FiscalpolicyathomeAfiscalexpansionreducesnationalsaving,netcapitaloutflows,andthesupplyofdollarsintheforeignexchangemarket……causingtherealexchangeratetoriseandNXtofall.εNXNX(ε

)ε

1NX

1NX

2ε

2slide382.FiscalpolicyabroadAnincreaseinr*reducesinvestment,increasingnetcapitaloutflowsandthesupplyofdollarsintheforeignexchangemarket……causingtherealexchangeratetofallandNXtorise.εNXNX(ε

)NX

1ε

1ε

2NX

2slide393.AnincreaseininvestmentdemandAnincreaseininvestmentreducesnetcapitaloutflowsandthesupply

ofdollarsintheforeignexchangemarket…εNXNX(ε

)…causingtherealexchangeratetoriseandNXtofall.ε

1NX

1NX

2ε

2slide404.TradepolicytorestrictimportsεNXNX

(ε

)1NX1ε

1NX

(ε

)2Atanygivenvalueofε,animportquota IM

NX demandfor dollarsshifts rightTradepolicydoesn’taffectSorI,socapitalflowsandthesupplyofdollarsremainsfixed.ε

2slide414.TradepolicytorestrictimportsεNXNX

(ε

)1NX1ε

1NX

(ε

)2Results:ε

>0

(demandincrease)NX=0

(supplyfixed)IM<0

(policy)EX<0

(riseinε)ε

2slide42TheDeterminantsofthe

NominalExchangeRateStartwiththeexpressionfortherealexchangerate:Solveitforthenominalexchangerate:slide43TheDeterminantsofthe

NominalExchangeRateSoedependsontherealexchangerateandthepricelevelsathomeandabroad……andweknowhoweachofthemisdetermined:slide44TheDeterminantsofthe

NominalExchangeRateWecanrewritethisequationintermsofgrowthrates(see“arithmetictricksforworkingwithpercentagechanges,”Chap2):Foragivenvalueofε,

thegrowthrateofeequalsthedifferencebetweenforeignanddomesticinflationrates.slide45InflationandnominalexchangeratesPercentagechangeinnominalexchangerate109876543210-1-2-3-4InflationdifferentialDepreciationrelativetoU.S.dollarAppreciationrelativetoU.S.dollar-1-2-3102345687FranceCanadaSwedenAustraliaUKIrelandSpainSouthAfricaItalyNewZealandNetherlandsGermanyJapanBelgiumSwitzerlandslide46PurchasingPowerParity(PPP)def1:adoctrinethatstatesthatgoodsmustsellatthesame(currency-adjusted)priceinallcountries.def2:thenominalexchangerateadjuststoequalizethecostofabasketofgoodsacrosscountries.Reasoning:arbitrage,thelawofonepriceslide47PurchasingPowerParity(PPP)PPP: eP=P*

Costofabasketofdomesticgoods,inforeigncurrency.Costofabasketofdomesticgoods,indomesticcurrency.Costofabasketofforeigngoods,inforeigncurrency.Solvefore

: e=P*/

P

PPPimpliesthatthenominalexchangeratebetweentwocountriesequalstheratioofthecountries’pricelevels.slide48PurchasingPowerParity(PPP)Ife=P*/P,

thenandtheNXcurveishorizontal:εNXNXε

=1S

-

IUnderPPP,changesin(S-I)havenoimpactonε

ore.slide49DoesPPPholdintherealworld?No,fortworeasons:1. Internationalarbitragenotpossible.nontradedgoodstransportationcosts2. Goodsofdifferentcountriesnotperfectsubstitutes.Nonetheless,PPPisausefultheory:It’ssimple&intuitiveIntherealworld,nominalexchangerateshaveatendencytowardtheirPPPvaluesoverthelongrun.slide50nochangenochangenochangenochange129.4-2.019.46.317.43.9115.1-0.32.2closedeconomysmallopeneconomyactualchangeεNXIrSG–T1980s1970sData:decadeaverages;allexceptrandεareexpressed

asapercentofGDP;εisatrade-weightedindex.

CASESTUDY

TheReaganDeficitsrevisitedslide51TheU.S.asalargeopeneconomySofar,we’velearnedlong-runmodelsfor

twoextremecases:closedeconomy(chapter3)smallopeneconomy(chapter5)Alargeopeneconomy---liketheU.S.---isinbetweenthesetwoextremes.Theanalysisofpoliciesorotherexogenouschangesinalargeopeneconomyisamixtureoftheresultsfortheclosed&smallopeneconomycases.Forexample…slide52NXIrlargeopen

economysmallopeneconomyclosedeconomyAfiscalexpansioninthreemodelsfalls,butnotasmuchasinsmallopeneconomyfallsno

changefalls,butnotasmuch

asinclosedeconomyno

changefallsrises,butnotasmuch

asinclosedeconomyno

changerisesAfiscalexpansioncausesnationalsavingtofall.

Theeffectsofthisdependonthedegreeofopenness:slide53Chaptersummary1. Netexports--thedifferencebetweenexportsandimportsacountry’soutput(Y)

anditsspending