约克大学summer math 宏观经济 lecture 8

MacroeconomicsLecture8:Theopeneconomy–tradeandfinance2InternationalTradeandFinance:SomeKeyIssuesTheBalanceofPaymentsConsistsofthecurrentaccountandthecapitalaccount.Adeficitontheformermustbecompensatedforviaasurplusonthelatter.Adeficitonbothisunsustainable3TheNeo-classicalTheoryofInternationalTradeTheprincipleofcomparativeadvantage(DavidRicardo–early19thcentury)Themoderninterpretationofanoldidea:Relativefactorendowmentsandinternationalspecialisation:theNeoclassicalmodel4Figure12.15TheTraditionalTheoryofInternationalTradeTheprincipleofcomparativeadvantageRelativefactorendowmentsandinternationalspecialization:theNeoclassicalmodelSuggestsgainsfromtradeandanincreaseinworldoutputAndthatinternationalwagesandotherfactorcostswillequalise6TheTraditionalTheoryofInternationalTradeTradetheoryanddevelopment:thetraditionalargumentsTradeisgoodforgrowthaccordingtothetraditionalmodelsTradetendstopromoteinternationalanddomesticequalityTradeensuresthatresourcesgetusedefficientlyFortradetoworkmarketsmustbecompetitiveOutward-lookingpolicythereforetobepreferred7Tradepolicy Free-tradeversusprotectionism Outwardversusinward-lookingpolicy exportpromotionversusimportsubstitution Debateisrelatedto,butnotidenticaltothe debateconcerningfree-marketsversusgovernmentintervention8TradePolicyExportpromotion:lookingoutwardandseeingtradebarriers1.Primary-commodityexportexpansionIssuesandproblemsLowIncomeelasticity,relativepricesandthetermsoftradeLowPriceelasticity–solowerpricesimplylowerrevenueIncreasedcompetitionandthefailureofinternationalcommodityagreementsTechnologicalsubstitutionofprimaryproducts(e.g.syntheticsubstitutesSubstantialProtectionismfromdevelopedeconomies–evenintheformof‘aid’9TradePolicyExportpromotion:lookingoutwardandseeingtradebarriers2.ExpandingmanufacturedgoodexportsIssuesandproblemsSuccessstories–‘AsianTigers’–thoughnotentirelymarket-basedLDCsfacesubstantialprotectionismfromdevelopedworldinmanufacturesaswellasprimaryproducts10TradePolicyPolicyinstrumentsTariffs,infantindustries,andprotection‘Import-Substitution’attractivefromthepointofviewofdomesticgovernmentasraisesrevenuesaswellasprotectinginfantindustries11Figure13.1Trade:the‘CurrentAccount’Increasedtrade–exportsandimportsofgoodsandservices–inprincipleraiseseconomicwelfareEconomistsforthesereasonsoften-butnotuniformly-advocateremovaloftradebarriersButdynamicconsiderations(e.g.thePrebisch-Singerhypothesis,andendogenousgrowththeory)mayunderminethestandard‘static’argumentsfortrade.13Financialflows:the‘CapitalAccount’Twosources:PrivatedirectandportfolioinvestmentPublicandprivatedevelopmentassistance14MultinationalCorporationsandFDIPros-EconomicMNCsaddtoinvestment–whichmightbeparticularlylowinLDCsMNCsmaybringinmuchneededforeignexchangeMNCsmaybringintaxrevenueMNCsprovide‘humancapital’andnewtechnology15MultinationalCorporationsandFDICons-EconomicMNCsmaystifledomesticsavingsandinvestmentthroughreducingcompetitionandexpatriationofprofitsMNCsmayinthelongrunstifleforeignexchangeflowsTaxcontributionmaybenegligibleinpracticeNewtechnologymaybeharmfultolocaleconomy16PrivatePortfolioInvestmentInternational(private-sector)investmentinthestocks,sharesandbondsofdomesticfirms17TheBalanceofPaymentsAccountDefinitionsExports–imports=‘tradebalance’Tradebalance+netinvestmentincome–debtservice+netremittances=‘currentaccount’Thecurrentaccountincludefinancialtransactionsassociatedwitheconomicflowvariables18TheBalanceofPaymentsAccountDefinitionsThecapitalaccountincludefinancialtransactionsassociatedwitheconomicstockvariablesInparticular–capitalitself–throughFDI,foreignloansandgrants19CreditsandDebitsintheBalanceofPaymentsAccount20AHypotheticalBalanceofPaymentsTable21FinancingandReducingPaymentsDeficitsPolicyissuesImprovethecurrentaccount?Importsubstitution/exportpromotionDevaluationofexchangerateReduceDemand–e.g.structuraladjustmentprograms22FinancingandReducingPaymentsDeficitsPolicyissuesImprovethecapitalaccount?EncourageFDIEncourageportfolioinvestmentIncreaseborrowing…SeekinternationalaidAcquireSpecialDrawingRights(SDRs)23Financialbubbles1997/98Financialcrisesinemergingmarkets2008-?ThecreditcrunchOtherbubbles:SouthSea,Tulipmania,dot-coms,etc.“Thistimeit’sdifferent”Manycauses…242008…SymptomsGlobalsharepricescollapseparticularlyintheBankingSectorNorthernRockLehmanBrothersRepurcussionsforrealeconomylinkwithhousingmarket–especiallysubprimemortgagesInternationallinkages252008…MacroeconomicBackdrop:lowinterestrates–CentralBankpolicyof‘inflationtargeting’CapitalaccountsurplusesinUS(andUK)(inflows)InstitutionalBackdrop:DeregulationComplexity26CurrentAccountBalances27TheCreditCrunchJargonalert Thefinancialsectorhasconstructeditsownlanguage…theremaybegoodreasonsforthis. Itmayalternativelybeameansofconcealinginformation.28TheBankingCollapseCause1:Principal-AgentproblemsinthefinancialsectorAlendingboomMortgagesCorporateDebtDeregulationComplexityinassetsBonusculture29TheBankingIndustryIssuesSecuritization:Creditprotection,pooling,andTranchingRiskCollateralizedDebtObligations(CDOs) consistofportfoliosofmortgagesandothertypesofloans,thengradedbyquality: Safest:“SuperSeniorGrade” Riskiest:“EquityTranch”(akaToxicWaste) Intermediatetranches30TheBankingIndustryIssuesSecuritization:Creditprotection,pooling,andTranchingRiskCollateralizedDebtObligations(CDOs) cut-offschoseninordertoreceiveparticularratings(e.g.AAA) CanbeinsuredusingCreditDefaultSwaps(CDS) CDSvolumein2007-$45-62trillion31TheBankingIndustryIssuesSecuritization:Creditprotection,pooling,andTranchingRiskCreditDefaultSwaps(CDS) e.g.AmericanInternationalGroup(AIG)–bailedoutbyFederalReserve:given$85bnfacilitybyFederalReserveinSeptember200832TheBankingIndustryIssuesSecuritization:Creditprotection,pooling,andTranchingRiskTypicalInvestmentposition:PurchaseCDOInsureusingCDSUnderestimateofactualriskexposure?33TheBankingIndustryTrendsMaturitymismatch:Increasing‘liquidityrisk’Commercialbankslend‘long’andborrow‘short’Bankstypicallyraisedmoneybyissuing90day‘paper’(i.e.theyborrowed,promisingtopaybackwithin90day)andthroughovernightborrowingLending(e.g.mortgages,commercialinvestmentprojects)typicallymuchlongertermOnlyokifshort-termborrowingisfeasible34TheBankingIndustryTrendsRisingpopularityofstructuredproductsE.g.demandfor‘AAA’securitiesasopposedtocompanyXsecuritiesLinkedtoincreasingautomationofassetmanagementandinternationalaccordsonbankingregulationIncreasingpressureoncredit-ratingsagencies(e.g.Standard&Poor,Moody’s…)35TheBankingIndustryConsequencesCheapcreditandthehousingboomSecuritizationputbanksinapositionofbeingabletoborrowcheaply–buthadtorecyclethisliquidityAlso–becauseeventualriskcouldbepassedonthroughsecurities,individualbankswereincreasinglyhappytolend.i.e.lowerlendingstandards36TheBankingIndustryConsequencesIncreasedMortgagedefaultsLedtocollapseinCDSprices(seefig.1inBrunnermeier(2009)…furtherdowngradingofassets…shutdownofparticularfunds(e.g.BearStearns)…deterioriationofbanks’balancesheet37TheBankingIndustryConsequencesCollapseofinterbank-lendingAsset-backedcommercialpaper(seefig.2inBrunnermeier(2009)Increasedspreads(seefig.3inBrunnermeier(2009))(TheCreditCrunch)38TheBankingIndustryConsequences‘Runs’onBanksNorthernRock‘WriteDowns’ofmortgagerelatedsecuritiesFor‘writedown’read‘writeoff’39TheBankingIndustryConsequences‘Bailouts’/RescuepackagesBearStearns–toobigtofail?acquiredbyJPMorganFannieMaeandFredd