IMF高级宏观经济学研修班课程CT1405MMF-L02Moneta

L-2.MonetaryandExchangeRatePolicyFrameworksandStrategiesPresenterRayBrooksJointChina-IMFTrainingProgramCourseonMacroeconomicManagementandFinancialSectorIssuesCT14.05OutlineI.Whataretheultimategoalsofmonetarypolicy?II.Whatarethealternativeframeworksandhowdotheywork?III.Howtochooseamonetaryframework?IV.Whatchoicesweremadeinthepast?V.Howwelldidtheyperform?VI.China’schoices2ThistrainingmaterialisthepropertyoftheInternationalMonetaryFund(IMF)andisintendedforuseinIMF’sInstituteforCapacitydevelopment(ICD)courses.AnyreuserequiresthepermissionofICD.I.Whataretheultimategoalsofmonetarypolicy?1.Pricestability2.Outputandemployment3.Exchangeratestability4.Postglobalcrisis,callstoalsotargetfinancialstability302468101214CoreinflationCyclicalunemploymentInflationandCyclicalUnemployment(Percent;averageacrossadvancedeconomies)1975–841985-941995-presentSources:OrganizationforEconomicCooperationandDevelopment;andIMFstaffcalculations(April2013WEO).TherelationshipbetweeninflationandcyclicalunemploymenthaschangedovertimeApparentthattheslopeofPhillipscurvehasfallenJV13.13.5Source:April2013WEOWhatcanmonetarypolicydo?•Caneffectivelycontrolpricesandexchangerates–nominalvariables•Canserveasanominalanchorintheeconomy•Cancontributetoeconomicgrowthandhelpcreatejobsthroughlowandstableinflation•Butitcannotbearealanchor–unemployment,growth,andrealexchangeratecannotbeaffectedpersistently6JV13.13.Monetarypolicyaffectsdemand,notsupply•Toomuchdemandstimulusstokesinflation•Stabilizeoutputarounditspotentialandinflationaroundtheinflationtarget–Jointlyminimizevolatilityofoutputandinflation[sy;sp]7QuantityPriceADASLong-runASJV13.13.ExchangeRatePolicy:Overview•Intheshortrun,thenominalERlevelaffectstherealexchangerate:•Ifdomesticinflationishigh,afixedexchangeratemightappreciatetheRER.“Therealexchangerateisalwaysflexible”•AnappreciatedRERaffectscompetitivenessofexportsandcanleadtocurrentaccountdeficits.•AflexibleERmightbeapowerfultooltorestoreexternalequilibrium.8*PEPRERII.WHATARETHEALTERNATIVEMONETARYANDEXCHANGERATEFRAMEWORKSANDHOWDOTHEYWORK?“Therearemanywaystoskinacat”StoneandBhundiaclassification9JV13.13.10Compatiblechoices•Countriesneedtochoose–amonetarypolicystrategy(e.g.,moneygrowthtargetsorinflationtargets)and–anexchangeratearrangement•ThetwochoicesmustbecompatibleJV13.13.TheImpossibleTrinity11CAPITALCONTROLSMonetaryindependenceHardPegPUREFLOATCapitalMobilityincreasingcapitalmobilityExchangeratestabilityChinaU.S.,JapanEU12The“impossibletrinity”Itisimpossibletosimultaneouslymaintain:afixedexchangerateandautonomousmonetarypolicytopursuegoalsfordomesticeconomicactivityandpricestabilityiftheeconomyreliesonalargevolumeofpotentiallyvolatileandinternationallymobilesourcesoffinanceJV13.13.FourViableAlternativeMonetaryandExchangeRateRegimes1.Exchangeratetargeting2.Monetaryaggregatestargeting3.Inflationtargeting4.Other“eclectic”frameworks13JV13.13.14HARDPEGS•ExchangearrangementswithnoseparatelegaltenderCurrencyunionDollarization•CurrencyboardINTERMEDIATE(SoftPegs)•Conventionalpeg•Stabilizedarrangement•Pegwithhorizontalbands•Crawlingpeg•Crawl-likearrangementFLOATING•Floating•FreefloatingRangeofOptionsforExchangeRate1.Exchangeratetargeting•Theexchangerateisthenominalanchor–Pre-World-War-Igoldstandard–Bretton-Woodsregime(1945-71)•AllcountriespeggingtogoldthroughtheU.S.dollar–Argentina’scurrencyboard(1991-2001)•“Hard”peg–DollarpeginSouthKorea,Thailand,Indonesia•“Soft”peg–WestAfricaMonetaryUnion,EuropeanMonetaryUnion(regionalsystem)15JV13.13.HowdoesERtargetingwork?•KeeptheERontarget(level,“crawl”,andsoon)•Aslongasthecapitalaccountisatleastpartlyopen,domesticinterestrate≈worldinterestrate+riskpremium•The“lawofoneprice”(PPP)willtakecareofinflationconvergence(dz=p*-p)•Maintainliquidityinthebankingsystem•It’sacomparativelysimpleregimetooperate!16JV13.13.“Thedevilisinthedetail”Acountrymaysaythattheyaremaintainingacrawlingpeg/managedfloat/freefloat,but:1.Havenovolatilityoftheexchangerate–Whileofficiallyfloating,somecentralbanksusedtophonecommercialbankwith“suggested”ERs2.Accumulateinternationalreserves•Distinguishdejureanddefactoregimes!–Chinaisdejuremanagedfloatingarrangement–Butdefactoclassifiedasa“crawl-likearrangement”byIMFin2013ArticleIV(astheRMB-U.S.$ratehasremainedina2percentcrawlingband)17JV13.13.China’spegwasstableagainstUS$mid-1990stomid2000sbutnominaleffectiveexchangeratemovedJV13.13.184567891050607080901001101201301992Q11995Q11998Q12001Q12004Q12007Q12010Q12013Q1RMD/USDollarExchangerateNominaleffectiveexchangeratesUSandChinaExchangeRatesInverseofNEERChina,CPI,1996=100InverseofNEERUSA,CPI,1996=100RMB/USDollarSources:InternationalFinancialStatisticsdatabaseChina’srealeffectiveexchangeratehasappreciatedmorethanthenominalrateJV13.13.19809010011012013014080901001101201301401998Q42000Q42002Q42004Q42006Q42008Q42010Q42012Q4NominalEffectiveExchangeRateandRealEffectiveExchangeRate(Index,2005=100)NominalEffectiveExchangeRateRealEffectiveExchangeRateSources:InternationalFinancialStatisticsdatabase2.Monetaryaggregatestargeting•Monetarygrowthisthenominalanchor.•