版权说明:本文档由用户提供并上传,收益归属内容提供方,若内容存在侵权,请进行举报或认领
文档简介
PrinciplesofEconomicsII:
MacroeconomicsMoneyGrowthandInflationTheEconomyintheLongRunEconomicGrowthHumanandPhysical,FinancialCapitalFormationMoneyandPricesTopicsHowdoesthemoneysupplyaffectinflationand
nominalinterestrates?DoesthemoneysupplyaffectrealvariableslikerealGDPortherealinterestrate?Howisinflationlikeatax?Whatarethecostsofinflation?Howseriousare
they?0IntroductionThischapterintroducesthequantitytheoryof
money
toexplainoneoftheTenPrinciplesofEconomicsfromChapter1:
Pricesrisewhenthegovtprints
toomuchmoney.Mosteconomistsbelievethequantitytheory
isagoodexplanationofthelongrunbehavior
ofinflation.0TheValueofMoneyP=thepricelevel
(e.g.,theCPIorGDPdeflator) Pisthepriceofabasketofgoods,measuredinmoney.1/Pisthevalueof$1,measuredingoods.Example:basketcontainsonecandybar.IfP=$2,valueof$1is1/2candybarIfP=$3,valueof$1is1/3candybarInflationdrivesuppricesanddrivesdownthevalueofmoney.0TheQuantityTheoryofMoneyDevelopedby18thcenturyphilosopher
DavidHumeandtheclassicaleconomistsAdvocatedmorerecently
byNobelPrizeLaureateMiltonFriedmanAssertsthatthequantityofmoneydeterminesthe
valueofmoneyWestudythistheoryusingtwoapproaches:Asupply-demanddiagramAnequation0MoneySupply(MS)Inrealworld,determinedbyFederalReserve,
thebankingsystem,consumers.Inthismodel,weassumetheFedpreciselycontrolsMSandsetsitatsomefixedamount.0MoneyDemand(MD)Referstohowmuchwealthpeoplewanttohold
inliquidform.DependsonP:
AnincreaseinPreducesthevalueofmoney,
somoremoneyisrequiredtobuyg&s.Thus,quantityofmoneydemanded
isnegativelyrelatedtothevalueofmoney
andpositivelyrelatedtoP,otherthingsequal. (These“otherthings”includerealincome,interest
rates,availabilityofATMs.)0TheMoneySupply-DemandDiagramValueof
Money,1/PPrice
Level,PQuantityofMoney11¾1.33½2¼4Asthevalueofmoneyrises,thepricelevelfalls.0TheMoneySupply-DemandDiagramValueof
Money,1/PPrice
Level,PQuantityofMoney1¾½¼11.3324MS1$1000TheFedsetsMS
atsomefixedvalue,
regardlessofP.0TheMoneySupply-DemandDiagramValueof
Money,1/PPrice
Level,PQuantityofMoney1¾½¼11.3324MD1Afallinvalueofmoney
(orincreaseinP)
increasesthequantityofmoneydemanded:0MS1$1000Valueof
Money,1/PPrice
Level,PQuantityofMoney1¾½¼11.3324TheMoneySupply-DemandDiagramMD1Padjuststoequate
quantityofmoney
demandedwith
moneysupply.eq’m
price
leveleq’m
value
of
moneyA0MS1$1000TheEffectsofaMonetaryInjectionValueof
Money,1/PPrice
Level,PQuantityofMoney1¾½¼11.3324MD1eq’m
price
leveleq’m
value
of
moneyAMS2$2000BThenthevalue
ofmoneyfalls,
andPrises.SupposetheFedincreasesthemoneysupply.0ABriefLookattheAdjustmentProcessHowdoesthiswork?Shortversion:AttheinitialP,anincreaseinMScauses
excesssupplyofmoney.Peoplegetridoftheirexcessmoneybyspendingit
ongoodsandservicesorbyloaningittoothers,whospendit.
Result:increaseddemandforgoods.Butsupplyofgoodsdoesnotincrease,
sopricesmustrise.(Otherthingshappenintheshortrun,whichwewill
studyinlaterchapters.)Resultfromgraph:IncreasingMScausesPtorise.0Realvs.NominalVariablesNominalvariablesaremeasuredinmonetaryunits.Examples:nominalGDP,
nominalinterestrate(rateofreturnmeasuredin$)
nominalwage($perhourworked)Realvariablesaremeasuredinphysicalunits.Examples:realGDP,
realinterestrate(measuredinoutput)
realwage(measuredinoutput)0Realvs.NominalVariablesPricesarenormallymeasuredintermsofmoney.Priceofacompactdisc: $15/cdPriceofapepperonipizza: $10/pizzaArelativepriceisthepriceofonegoodrelativeto
(dividedby)another:RelativepriceofCDsintermsofpizza:priceofcdpriceofpizza$15/cd$10/pizza=Relativepricesaremeasuredinphysicalunits,
sotheyarerealvariables.=1.5pizzaspercd0Realvs.NominalWageAnimportantrelativepriceistherealwage:W=nominalwage=priceoflabor,e.g.,$15/hourP=pricelevel=priceofg&s,e.g.,$5/unitofoutputRealwageisthepriceoflaborrelativetotheprice
ofoutput:WP=3unitsoutputperhour$15/hour$5/unitofoutput=0TheClassicalDichotomyClassicaldichotomy:
thetheoreticalseparationofnominalandrealvariablesHumeandtheclassicaleconomists
suggestedthatmonetarydevelopments
affectnominalvariablesbutnotrealvariables.Ifcentralbankdoublesthemoneysupply,
Hume&classicalthinkerscontendallnominalvariables–includingprices–
willdouble.allrealvariables–includingrelativeprices–
willremainunchanged.0TheNeutralityofMoneyMonetaryneutrality:thepropositionthatchanges
inthemoneysupplydonotaffectrealvariablesDoublingmoneysupplycausesallnominalprices
todouble;whathappenstorelativeprices?Initially,relativepriceofcdintermsofpizzaispriceofcdpriceofpizza=1.5pizzaspercd$15/cd$10/pizza=Afternominalpricesdouble,priceofcdpriceofpizza=1.5pizzaspercd$30/cd$20/pizza=Therelativepriceisunchanged.0TheNeutralityofMoneySimilarly,therealwageW/Premainsunchanged,soquantityoflaborsupplieddoesnotchangequantityoflabordemandeddoesnotchangetotalemploymentoflabordoesnotchangeThesameappliestoemploymentofcapitaland
otherresources.Sinceemploymentofallresourcesisunchanged,
totaloutputisalsounchangedbythemoneysupply.Monetaryneutrality:thepropositionthatchanges
inthemoneysupplydonotaffectrealvariables0TheNeutralityofMoneyMosteconomistsbelievetheclassicaldichotomyandneutralityofmoneydescribetheeconomyinthelongrun.Inlaterchapters,wewillseethatmonetarychanges
canhaveimportantshort-runeffects
onrealvariables.0TheVelocityofMoneyVelocityofmoney:therateatwhichmoneychangeshandsNotation:
PxY =nominalGDP
=(pricelevel)x(realGDP)
M =moneysupply
V =velocityVelocityformula:V=PxYM0TheVelocityofMoneyExamplewithonegood:pizza.
In2008,
Y =realGDP=3000pizzas
P =pricelevel=priceofpizza=$10
PxY =nominalGDP=valueofpizzas=$30,000
M =moneysupply=$10,000 V =velocity=$30,000/$10,000=3
Theaveragedollarwasusedin3transactions.Velocityformula:V=PxYM0Onegood:corn.Theeconomyhasenoughlabor,capital,andland
toproduceY=800bushelsofcorn.Visconstant.In2008,MS=$2000,P=$5/bushel.ComputenominalGDPandvelocityin2008.ACTIVELEARNING1
ExerciseU.S.NominalGDP,M2,andVelocity(1960=100)
1960-2007NominalGDPM2VelocityVelocityisfairly
stableovertime.0TheQuantityEquationMultiplybothsidesofformulabyM:
MxV=PxYCalledthequantityequationVelocityformula:V=PxYM0TheQuantityTheoryin5Steps1. Visstable.2.
So,achangeinMcausesnominalGDP(PxY)
tochangebythesamepercentage.3. AchangeinMdoesnotaffectY:
moneyisneutral,
Yisdeterminedbytechnology&resources4. So,Pchangesbysamepercentageas
PxYandM.5. Rapidmoneysupplygrowthcausesrapidinflation.Startwithquantityequation:MxV=PxY0ACTIVELEARNING2
ExerciseOnegood:corn.Theeconomyhasenoughlabor,capital,
andlandtoproduceY=800bushelsofcorn.Visconstant.In2008,MS=$2000,P=$5/bushel.For2009,theFedincreasesMSby5%,to$2100.a. Computethe2009valuesofnominalGDPandP.
Computetheinflationratefor2008-2009.b. Supposetech.progresscausesYtoincreaseto824
in2009.Compute2008-2009inflationrate.IfrealGDPisconstant,then
inflationrate=moneygrowthrate.IfrealGDPisgrowing,then
inflationrate<moneygrowthrate.Thebottomline:Economicgrowthincreases#oftransactions.Somemoneygrowthisneededfortheseextra
transactions.Excessivemoneygrowthcausesinflation.ACTIVELEARNING2
SummaryandLessonsaboutthe
QuantityTheoryofMoneyHyperinflationHyperinflationisgenerallydefinedasinflation
exceeding50%permonth.RecalloneoftheTenPrinciplesfromChapter1:
Pricesrisewhenthegovernment
printstoomuchmoney.
Excessivegrowthinthemoneysupplyalwayscauseshyperinflation.0TheInflationTaxWhentaxrevenueisinadequateandabilitytoborrowislimited,govtmayprintmoneytopayforits
spending.Almostallhyperinflationsstartthisway.Therevenuefromprintingmoneyisthe
inflationtax:printingmoneycausesinflation,whichislikeataxoneveryonewhoholdsmoney.IntheU.S.,theinflationtaxtodayaccountsfor
lessthan3%oftotalrevenue.0TheFisherEffectRearrangethedefinitionoftherealinterestrate:Therealinterestrateisdeterminedbysaving&
investmentintheloanablefundsmarket.Moneysupplygrowthdeterminesinflationrate.So,thisequationshowshowthenominalinterestrateisdetermined.Real
interestrateNominal
interestrateInflationrate+=0TheFisherEffectInthelongrun,moneyisneutral,
soachangeinthemoneygrowthrateaffects
theinflationratebutnottherealinterestrate.So,thenominalinterestrateadjustsone-for-onewith
changesintheinflationrate.ThisrelationshipiscalledtheFishereffect
afterIrvingFisher,whostudiedit.Real
interestrateNominal
interestrateInflationrate+=0U.S.NominalInterest&InflationRates,1960-2007Thecloserelation
betweenthesevariablesisevidencefor
theFishereffect.0TheFisherEffect&theInflationTaxTheinflationtaxappliestopeople’sholdingsofmoney,
nottheirholdingsofwealth.TheFishereffect:anincreaseininflationcauses
anequalincreaseinthenominalinterestrate,
sotherealinterestrate(onwealth)isunchanged.Real
interestrateNominal
interestrateInflationrate+=0TheCostsofInflationTheinflationfallacy:mostpeoplethinkinflation
erodesrealincomes.Butinflationisageneralincreaseinprices
ofthethingspeoplebuyandthethingstheysell
(e.g.,theirlabor).Inthelongrun,realincomesaredetermined
byrealvariables,nottheinflationrate.0U.S.AverageHourlyEarnings&theCPICPI
(leftscale)Nominalwage
(rightscale)Inflationcauses
theCPIand
nominalwages
torisetogetheroverthelongrun.0TheCostsofInflationShoeleathercosts:theresourceswasted
wheninflationencouragespeopletoreducetheir
moneyholdingsIncludesthetimeandtransactionscostsofmore
frequentbankwithdrawalsMenucosts:thecostsofchangingpricesPrintingnewmenus,mailingnewcatalogs,etc.0TheCostsofInflationMisallocationofresourcesfromrelative-price
variability:Firmsdon’tallraisepricesatthesame
time,sorelativepricescanvary… whichdistortstheallocationofresources.Confusion&inconvenience:Inflationchanges
theyardstickweusetomeasuretransactions. Complicateslong-rangeplanningandthecomparisonofdollaramountsovertime.0TheCostsofInflationTaxdistortions: Inflationmakesnominalincomegrowfasterthanrealincome. Taxesarebasedonnominalincome,
andsomearenotadjustedforinflation. So,inflationcausespeopletopaymoretaxes
evenwhentheirrealincomesdon’tincrease.0ACTIVELEARNING3
TaxdistortionsYoudeposit$1000inthebankforoneyear.CASE1:inflation=0%,nom.interestrate=10%CASE2:inflation=10%,nom.interestrate=20%a. Inwhichcasedoestherealvalueofyourdepositgrow
themost?Assumethetaxrateis25%.b. Inwhichcasedoyoupaythemosttaxes?c. Computetheafter-taxnominalinterestrate,
thensubtractoffinflationtogettheafter-taxreal
interestrateforbothcases.0ACTIVELEARNING3
SummaryandlessonsInflation…raisesnominalinterestrates(Fishereffect)
butnotrealinterestratesincreasessavers’taxburdenslowerstheafter-taxrealinterestrateDeposit=$1000.Taxrate=25%.CASE1:inflation=0%,nom.interestrate=10%CASE2:inflation=10%,nom.interestrate=20%ASpecialCostofUnexpectedInflationArbitraryredistributionsofwealth
-Higher-than-expectedinflationtransferspurchasing
powerfromcreditorstodebtors:Debtorsgettorepaytheirdebtwithdollarsthataren’tworthasmuch.
-Lower-than-expectedinflationtransferspurchasing
powerfromdebtorstocreditors.
-Highinflationismorevariableandlesspredictable
thanlowinflation.
-So,thesearbitraryredistributionsarefrequent
wheninflationishigh.0TheCostsofInflationAllthesecostsarequitehighforeconomies
experien
温馨提示
- 1. 本站所有资源如无特殊说明,都需要本地电脑安装OFFICE2007和PDF阅读器。图纸软件为CAD,CAXA,PROE,UG,SolidWorks等.压缩文件请下载最新的WinRAR软件解压。
- 2. 本站的文档不包含任何第三方提供的附件图纸等,如果需要附件,请联系上传者。文件的所有权益归上传用户所有。
- 3. 本站RAR压缩包中若带图纸,网页内容里面会有图纸预览,若没有图纸预览就没有图纸。
- 4. 未经权益所有人同意不得将文件中的内容挪作商业或盈利用途。
- 5. 人人文库网仅提供信息存储空间,仅对用户上传内容的表现方式做保护处理,对用户上传分享的文档内容本身不做任何修改或编辑,并不能对任何下载内容负责。
- 6. 下载文件中如有侵权或不适当内容,请与我们联系,我们立即纠正。
- 7. 本站不保证下载资源的准确性、安全性和完整性, 同时也不承担用户因使用这些下载资源对自己和他人造成任何形式的伤害或损失。
最新文档
- 中国合同服务行业市场现状分析及竞争格局与投资发展研究报告2024-2030年版
- 2024至2030年中国高氯酸盐行业深度调研及发展预测报告
- 2024至2030年中国贵州省大健康产业市场运行及投资策略咨询报告
- 2024至2030年中国无水硫酸钠行业发展预测及投资策略报告
- 2024至2030年中国弹簧夹头行业发展预测及投资策略报告
- 2024至2030年中国乡村产业振兴深度调研及投资战略分析报告
- 2024至2030年马来西亚高频变压器行业投资可行性调研专题报告
- 2024至2030年全球与中国粗纺羊绒纱市场现状及未来发展趋势
- 信用合作社信用体系建设与数据应用考核试卷
- 海上机场建设与运营考核试卷
- TCA785中文资料
- 作为教师如何上好每一堂课
- 反三违制度及考核办法
- 超全的项目前期手续流程图
- 工法评分标准
- 胆囊结石的护理资料PPT课件
- 贵州省2011版水利水电工程机械台班定额计算表
- 《新视野英语教程读写教程2》说课稿中文
- 篮球考核评价表 高段
- JWB90D使用说明书
- 工会固定资产管理制度
评论
0/150
提交评论