Part 3 Macroeconomic Analysis of Finance ???????? Chapter 6 Supply and Demand for Money ???????? - PowerPoint PPT Presentation

Loading...

PPT – Part 3 Macroeconomic Analysis of Finance ???????? Chapter 6 Supply and Demand for Money ???????? PowerPoint presentation | free to download - id: 6cdf63-OTI5Z



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Part 3 Macroeconomic Analysis of Finance ???????? Chapter 6 Supply and Demand for Money ????????

Description:

Part 3 Macroeconomic Analysis of Finance Chapter 6 Supply and Demand for Money Naotsugu HAYASHI – PowerPoint PPT presentation

Number of Views:16
Avg rating:3.0/5.0
Slides: 17
Provided by: JunT5
Learn more at: http://www.i.hosei.ac.jp
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Part 3 Macroeconomic Analysis of Finance ???????? Chapter 6 Supply and Demand for Money ????????


1
Part 3 Macroeconomic Analysis of Finance
???????? Chapter 6 Supply and Demand for Money
????????
  • Naotsugu HAYASHI ? ??
  • Professor of Economics ?????
  • Faculty of Business Administration ????
  • Hosei University ????

2
1. Kinds of money ?????
Money a vehicle of exchange, currency
Narrow Money M1 Cash Currency Deposit
Currency (Demand Deposits) \481 trillion
\74 trillion \407 trillion
(2009.1) Broad Money M2 M1 Time Deposits
(Quasi Currency) \1120 trillion \481
trillion \539 trillion M2 CD M2
Negotiable Certificate of Deposits \1143
trillion \1120 trillion \23 trillion Broad
Liquidity M3 CD M2 CD Postal Savings
Other Savings Money Trust ?? ?????????
????M1????????(?????) 481??
74?? 407?? ( 2009?1?) ????M2M1?????(time
deposit???) 1120?? 481?? 539?? M2CDM2????
??? 1143?? 1120?? 23?? ?????
M3CDM2CD??????????????????
3
2.Supply of Money ?????
Gold Standard ? supply money to the private
sector on the basis of the gold reserve. a
system of issuing money warranted by the gold
reserve. Paper Money Standard (Managed Currency
System) ? supply money discretionarily without
any relation to gold reserve Money (Coin) ? the
government of Japan has the right of issuing
coins only to the Bank of Japan, but the Bank of
Japan has the right of determining the
circulation amount of coins and bank notes Bank
of Japan Notes ? the Bank of Japan has the right
of issuing Bank Notes to the private sector and
the government, and plays a role of a bank of
issuing bank notes ?????????????????????????
?????(?????)?????????????????????
??(??)???????????????????????????
?????????????????????????
4
3. Central Bank Lending and Discount Rate
Operations ?????????????
BOJ Loans Policy the Bank of Japan supplies
cash currency to private banks by lending BOJ
loans at the official discount rate of the Bank
of Japan or by discounting qualified notes and
bills held by private banks at the official
discount rate. the Bank of Japan corresponds in
an accommodative manner to the demand for BOJ
loans from private banks, ? the BOJ loans are
determined endogenously in this aspect Official
Discount Rate Operationsdecreases BOJ loans by
raising the official discount rate or increases
them by reducing it ? determine the BOJ
loans exogenously ?????????????????????????????
??????? ?????????????????(accommodative)
??? ???? ???????????????????????????????
? ?????????
5
4. Open Market Operations ??????
Open Market Operations (buying and selling
operations of bonds ) Buying operation to
increase the money supply by purchasing national
bonds and other bonds and notes. Selling
operation to decrease the money supply by
selling national bonds and other bonds and notes
They are conducted actively in the markets ?
determine the money supply exogenously
??????(??????)????????????
???????????
???(active)??????? ???????????????????????????
???? ???(active)??????? ?????????(endogenous)?
??? ???(exogenous)????????
6
5. Deposit Reserve Ratio Operation ???????
Deposit Reserve System Commercial banks must
hold deposit reserves as checking deposits at
their BOJ account according to their balances of
demand deposits and time deposits. Deposit
Reserve Ratio Operation the Bank of Japan
requires private banks to deposit more (or fewer)
reserves by raising (or reducing) deposit reserve
ratio and thereby absorbs (increases) the money
supply ? conduct the operation actively ?
exogenously ? the money supply consists of both
endogenous and exogenous parts
?????????????????????????????????????????
??????????????????????????????????????
???(active)??????? ?????????(endogenous)????
???(exogenous)????????
7
6. Money Supply Route ?????????
  • Supply of Cash Currency
  • Central banks like the Bank of Japan ?
    commercial banks
  • ? other financial institutions and business
    corporations
  • ? households and the general public
  • Supply of deposit Currency
  • Commercial banks
  • ? other financial institutions and business
    corporations
  • ? households and the general public
  • ???????
  • ?? ? ????
  • ? ????(??)????????????????
  • ? ???????
  • ???????
  • ???? ? ????(??)????????????????
  • ? ???????

8
7. Credit Creation of Deposit Currency ?????????
  • Primary deposits by firms and households
  • ? Most of them except cash reserves are lent to
    firms and households
  • ? derivative deposits by firms and households
  • ? D primary deposits, R deposit reserve
    ratio
  • this infinite geometric series is written
    as
  • DD(1-R)D(1-R)2D(1-R)3D/R
  • It generates as 1/R times total deposits as
    primary deposits D.
  • Credit Creation by Phillips
  • 1/R a credit creation multiplier
  • ???????????
  • ???????????????????????
  • ???????D???????R?????
  • ?????????????
  • ?????D?1/R??????????????
  • 1/R??????

9
8. Demand for Money ?????
Adam Smith and other classical school economists
? transactions motive to demand money as a
medium of exchange, determined by a money amount
of transactions or income level ?mm(PT) or
mm(Y), m(Y)gt0 ? precautionary motive to
prepare for unexpected situations in the future,
determined by a money amount of transactions or
income level ?mm(PT) or mm(Y) , m(Y)gt0
??? ????? ????????????????????????PT??????????
Y????? ?????? ?mm(PT)???mm(Y) ,
m(Y)gt0 ?????? ????????????????????????PT?
????Y??????????? ?mm(PT)???mm(Y), m(Y)gt0
10
8B. Demand for Money ?????
  • John Maynard Keynes
  • ? speculative motive
  • to demand and hold money in order to purchase
    earning assets.
  • When interest rates or rates of return on
    assets rise, we buy earning assets with
    money and the demand for this type of money
    decreases ?mm(i), m(i)lt0
  • asset motive or portfolio selection motive
  • ????
  • ????????????????????????????
  • ???i(??????)???????????? ?mm(i), m(i)lt0
  • ?????????????

11
9.Money Demand Function ??????
  • ? Classical School
  • MDPYMoney demanddue to transactions and
    precautionary motives
  • ?Keynesian School
  • MDL(PY,i), or MD/PkYL(i), LLiquidity
    preference function
  • Real demand for moneydue to transactions and
    precautionary motives
  • speculative motive
  • active balanceidle
    balance

  • ????
  • MDPY????????????????????
  • ??????
  • MDL(PY,i) ??? MD/PkYL(i) L???????
  • ??????????????????????
  • ????????????
  • ???? ????

12
10. Money Supply-Demand Balance and Quantity
Theory of Money ?????????????
Money SupplyM, Velocity of MoneyV, Price
levelP, Transactions volumeT, IncomeY?
Supply (Circulation) of MoneyMV Demand for
Money due to transactions and precautionary
motivesPT or PY At equilibrium, Exchange
Equation by Fisher MVPT (Vtransactions
velocity), or MVPY (Vincome velocity) ?
PMV/Y Y is determined in real relations, V is
constant ?Money supply M determines prices P. ?
Quantity Theory of Money, View of monetary
veil M/P(1/V)YkY , kMarshallian k ? Cambridge
Real Balance Equation ?????M????????V?????P????T?
??Y?????MV ?????????????????PT ?? PY
??????????????????? MVPT(V??????),
MVPY(V??????) ?PMV/Y ????Y??????????V????????
??? ???M?????????P??? ? ????????????
M/P(1/V)YkY , k??????k ? ?????????????
Quantity Theory
13
11. Money Supply-Demand Balance and Liquidity
Preference Theory ??????????????
Keynes(1936) General Theory of Employment,
Interest, and Money MD/PkYL(i)m1m2active
balanceidle balance Real demand for moneydue to
transactions and precautionary motivesspeculative
motive ? Full employment ?Money demand function
stands vertically L'(i)?L/?i0? interest rate
does not affect money demand?Quantity theory of
money holds increase (decrease) MS?interest rate
falls (rises), M/P is unchanged ????Keynes(??????
???????????1936?) MD/PkYL(i)m1m2???????? ???
??????????????????? ???????????? ???????
??????????????L'(i)?L/?i0? ???????????????????
???????? ????MS??????????????????? M/P???
Liquidity Preference
14
11B. Money Supply-Demand Balance and Liquidity
Preference Theory ??????????????
  • ?Depression
  • ?Money demand function lies horizontally
    L'(i)?L/?i8?
  • Keynes Liquidity Trap The flat part of L
    curve
  • When the money supply MS is increased
    (decreased) ?M increases (decreases),
  • but the interest rate remains unchanged
  • ?Underemployment ? the money demand curve is
    downward-sloping
  • L'(i)?L/?ilt0?
  • When the money supply MS is increased
    (decreased) ?M increases (decreases),
  • but the interest rate falls (rises)
  • ??????
  • ??????????????L'(i)?L/?i8?
  • ????????????
  • ??????????(liquidity trap)L?????
  • ????MS???????M???????
  • ??????
  • ?????????????????????
  • L'(i)?L/?ilt0?
  • ????MS???????M?????
  • ??????????

Liquidity Preference
15
12. Determination of Classical Equilibrium
Interest Rate ????????????
Demand curve for Investment fund I(i)
downward-sloping, Profit of round-about
production expressed by the marginal rate of
return on capital Supply curve of Investment fund
S(i) upward-sloping, consumers patience
expressed by the marginal rate of time
preference I(i) S(i) ? determine the
equilibrium rate of interest i at the
equilibrium E The interest rate adjusts
SavingsInvestment balance ? i is equal to the
marginal rate of return on real capital ? the
natural rate of interest, theory of real
interest rate the equilibrium in the money
market determines only the price level but the
interest rate does not adjust the demand and
supply for money ?????????I(i)??????????????????
??????? ????S(i)???????????????????????
I(i)S(i) ?????E??????i???? ???? ??????????
?i?????????????? ??????, ??????
????????????P???? ?????????????????
Equilibrium Interest Rate
16
13. Determination of Keynesian Equilibrium
Interest Rate ??????????????
Demand curve for Funds IL downward-sloping Sup
ply curve for Funds SM upward-sloping IL
SM ? determines the equilibrium rate of interest
i the interest rate adjusts the demand and
supply of funds in the money market to bring
about equilibrium ? the money rate of interest,
theory of monetary interest, loanable fund
theory Ohlin, Robertson ???????IL????
????SM???? ILSM ?????F??????i????
????????????????????? ??? ??????(monetary
rate of interest)? ????????????
???????????
Real Monetary Interest Rats
About PowerShow.com