中级宏观LM模型课件ch04.ppt

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Chapter 4: Financial Markets Copyright ? 2009 Pearson Education, Inc. Publishing as Prentice Hall ? Macroeconomics, 5/e ? Olivier Blanchard CHAPTER 4 Financial Markets Financial Markets CHAPTER 4 Prepared by: Fernando Quijano and Yvonn Quijano Copyright ? 2009 Pearson Education, Inc. Publishing as Prentice Hall ? Macroeconomics, 5/e ? Olivier Blanchard * of 32 4-1 The Demand for Money Money, which you can use for transactions, pays no interest. There are two types of money: currency, coins and bills, and checkable deposits, the bank deposits on which you can write checks. Bonds pay a positive interest rate, i, but they cannot be used for transactions. The proportions of money and bonds you wish to hold depend mainly on two variables: Your level of transactions The interest rate on bonds Money market funds pool together the funds of many people. The funds are then used to buy bonds—typically government bonds. * of 32 4-1 The Demand for Money Let’s go from this discussion to an equation describing the demand for money. Read this equation in the following way: The demand for money, , is equal to nominal income, $Y, times a function of the interest rate, i, with the function denoted by L(i ). Deriving the Demand for Money The demand for money: increases in proportion to nominal income ($Y), and depends negatively on the interest rate (L(i) and the negative sign underneath). * of 32 4-1 The Demand for Money Deriving the Demand for Money For a given level of nominal income, a lower interest rate increases the demand for money. At a given interest rate, an increase in nominal income shifts the demand for money to the right. The Demand for Money Figure 4 - 1 * of 32 4-2 The Determination of the Interest Rate, I Money Demand, Money Supply, and the Equilibrium Interest Rate Equilibrium in financial markets requires that money supply be equal to money demand, or that Ms = Md. Then using