Monetary policy: goals and instruments.
Goals.
To assist the economy in achieving
·a full-employment
·noninflationary level of total output
Tools of monetary policy.
- Open-market operation;(операции на открытом рынке: купля-продажа гос. ценных бумаг)
Buying and selling (from/to commercial banks and the public) of government bonds by the Central Bank in the open market.
Buying from commercial banks:
-Commercial banks give up part their holding of securities
-The CB pay for these securities by increasing the reserves of commercial banks.
·The reserve ratio;(норматив обязательного резервирования)
Raising the reserve ratio increases the amount of reserves banks must keep. Banks lose excess reserves, diminishing their ability to create money by lending. They are forced to contract the money supply.
·The discount rate.(учетная ставка или ставка рефинансирования)
Commercial banks borrowng from the CB increases the reserves of commercial banks, enhancing their ability to extand credit.
Types of monetary policy.
- “Easy money” policy
The economy is faced with recession.
The CB:
- buyes securities
- reduces the reserve ratio
- lowers the discount rate
- “Tight money” policy
Th economy is faced with inflation.
The CB:
- sells securities
- increases the reserve ratio
- raise the discount ratio
Effectiveness of monetary policy. ?
The Phillips curve.
Shows a stable relationship between the rate of inflation and the unemployment rate.
This curve is available for short-run period. In the long-run the economy automatically gravitates to its natural rate of unemployment. The Philips curve is vertical.
The adaptive and rational expectations theories.
The adaptive expectations theory
- Assumes people form their expectations of future inflation on the basis of previous and present rates of inflation. When people do, the U rate return to the natural rate.
- The long-run Phillips Curve is therefore vertical.
The rational expectations theory
- Assumes that increases in nominal wages lag behind increases in the price level because the increases in the price level are not anticipated.
|
|
|
- Workers will anticipate the inflationary effects of monetary and fiscal policy and will build these expectations into their wage demands.
- As a result, not even a short-run Phillips curve will exist.
- The economy will simply move along its vertical long-run Phillips Curve when government undertakes expansionary policies.
44. Supply – side economics. Laffer curve.Changes in AS must be recognized as active forces in determining the levels of both inflation and unemployment.
Tax- Transfer disincentive.
The growth of tax-transfer system has negatively affected incentives to work, invest, innovate.
Supply-side economists believe.
How long and how hard individuals work depends on how much additional after-tax earnings they derive from work
So, government should reduce marginal tax rates on earned incomes.
The existence of a wide variety of public transfer programs has eroded incentives to work
Lower marginal tax rates encourage saving and investing
Laffer Curve
The main idea: Lower tax rates are compatible with constant or even engaged tax revenues.
Up to “max”-large tax revenue,
Then-tax revenues will decline.
Tax rates can be lowered without producing budget deficits for two reasons:
-Less tax evasion. It declines when are reduced
-Reduced transfers
Дата добавления: 2018-08-06; просмотров: 192; Мы поможем в написании вашей работы! |
Мы поможем в написании ваших работ!