宏观经济学课件(英文版)10.ppt

May 19, 2003 73-347 Game Theory--Lecture 1 May 19, 2003 Lecture 1  Chapter 10 The Demand for Money and the Price Level Concepts of Money Our model has three forms of assets: money, bonds, and ownership of capital. Our analysis in chapters 6-8 under the assumption that each household held a constant stock of money, M. Why households hold part of their assets as money? Demand for money. Concepts of Money Assumed that money is the sole medium of exchange in the economy. Households do not directly exchange goods for goods (a process called barter) or bonds for goods, and so on. The money in our model matches up with paper currency issued by a government. Concepts of Money These paper currencies are sometimes called fiat money because they have value due to government fiat, rather than through intrinsic value. At earlier times, societies tended to rely more on commodity money, such as gold and silver coins, which do have intrinsic value. Concepts of Money Why this money might occupy the dominant position as an economy’s medium of exchange? First, the government may impose legal restrictions that prevent private parties, such as Microsoft Corporation, from issuing small-size, interest-bearing bonds that could serve conveniently as hand-to-hand currency. Concepts of Money Further, the government may enact statutes that reinforce the use of its money. As an example, there is the proclamation that the U.S. dollar is “legal tender for all debts public and private.” Also, U.S. courts are more inclined to enforce contracts that are denominated in U.S. dollars rather than in some other unit. Concepts of Money Another consideration is the cost of establishing one’s money as reliable and convenient. Another consideration is the cost of establishing one’s money as reliable and convenient. Because of these costs, money would always tend to bear interest at a rate lower than bonds. In fact, because of the inconvenience of paying interest on hand-to-hand currency, the interes