Tiểu luận môn lý thuyết tài chính monetary policy theory

CHAPTER 24: Monetary Policy Theory Instructor: Prof & Dr Tran Ngoc Tho Members of group: - Cao Thị Ánh Tuyết - Vũ Thanh Tùng CHAPTER 24: Monetary Policy Theory RESPONSE OF MONETARY POLICY TO SHOCKS HOW ACTIVELY SHOULD POLICYMAKERS TRY TO STABILIZE ECONOMIC ACTIVITY? INFLATION: ALWAYS AND EVERYWHERE A MONETARY PHENOMENON CAUSES OF INFLATIONARY MONETARY POLICY RESPONSE OF MONETARY POLICY TO SHOCKS The central goal of central banks • Price stability: The central bank pursues price stability is that monetary policy should try to minimize the difference between inflation T and the inflation target (π - π ) – inflation gap • Economic activity stability: The economic activity can be sustained only at potential output, this objective of monetary policy can be P described as saying that monetary policymakers want to have aggregate output close to its potential level, Y The central bank want to P minimize the difference between aggregate output and potential output (Y − Y ) – output gap RESPONSE OF MONETARY POLICY TO SHOCKS • Demand Shocks • Permanent Supply Shocks • Temporary Supply Shocks RESPONSE OF MONETARY POLICY TO SHOCKS Response to an Aggregate Demand Shock LRAS We begin by considering the effects of an aggregate demand Inflation Rate, π shock, such as the disruption to financial markets starting in AS1 August 2007 that increased financial frictions and caused both consumer and business spending to fall The economy is initially at point 1, where output is at Y P T π T and inflation is at π AD1 AD2 Y The negative demand shock decreases aggregate demand, shifting AD1 to the left to AD2 P Aggregate Output, Y RESPONSE OF MONETARY POLICY TO SHOCKS Response to an Aggregate Demand Shock LRAS No Policy Response Inflation Rate, π AS1 Because the central bank does not respond by changing the autonomous component of monetary policy, the aggregate demand curve remains at AD2 and so the economy goes to the intersection of AS1 and AD2 Here, aggregate output P falls to Y2, below potential output Y , and inflation falls to T π2, below the inflation target of π AS3 π T π2 π3 AD1 AD2 Y2 Y P Aggregate Output, Y The short run aggregate supply curve will shift down and to the right to AS3 Output will again be back at its potential level, while inflation will fall to a lower level of π3 RESPONSE OF MONETARY POLICY TO SHOCKS Response to an Aggregate Demand Shock LRAS Policy Stabilizes Economic Activity and Inflation in the Short Inflation Rate, π Run The central bank uses autonomously easing monetary policy by cutting the real interest rate at any given inflation rate  The AS1 π T 1,3 π2 aggregate demand curve shifts from AD2 back to AD1 and the economy returns to point AD1 AD2 Y2 Y P Aggregate Output, Y In the case of aggregate demand shocks, there is no tradeoff between the pursuit of price stability and economic activity stability A focus on stabilizing inflation leads to exactly the right monetary policy response to stabilize economic activity No conflict exists between the dual objectives of stabilizing inflation and economic activity – Olivier Blanchard RESPONSE OF MONETARY POLICY TO SHOCKS Response to a permanent Supply Shock Inflation Rate, π LRAS3 LRAS1 Suppose the economy suffers a permanent negative supply AS2 shock because an increase in regulations permanently reduces AS1 the level of potential output π T AD1 P P Potential output falls from Y to Y 3, and the long-run aggregate supply curve shifts leftward from LRAS1 to LRAS3 The permanent supply shock triggers a price shock that shifts the short-run aggregate supply curve upward from AS1 to AS2 P Y P Y Aggregate Output, Y RESPONSE OF MONETARY POLICY TO SHOCKS Response to a permanent Supply Shock Inflation Rate, π LRAS1 LRAS3 AS3 No Policy Response AS2 If policymakers leave autonomous monetary policy unchanged, the economy will move to point 2, with inflation rising to π2 and output falling to Y AS1 π3 π2 π T AD1 P Y Y2 P Y Aggregate Output, Y P Because this level of output is still higher than potential output, Y , the short-run aggregate supply curve keeps shifting up and to the left until it reaches AS 3, where it intersects AD on LRAS The economy moves to point 3, eliminating the output gap but leaving inflation P higher at π3 and output lower at Y RESPONSE OF MONETARY POLICY TO SHOCKS Response to a permanent Supply Shock FIGURE Inflation Rate, π LRAS3 LRAS1 Policy Stabilizes Inflation AS3 The monetary authorities would autonomously tighten monetary policy by increasing the real interest rate at any given inflation rate, thus causing investment spending to fall and AS1 π2 π T lowering aggregate demand at any given inflation rate The economy thus goes to point 3, where the output gap is zero and T inflation is at the target level of π AD1 AD2 P Y P Y Aggregate Output, Y Here again, keeping the inflation gap at zero leads to a zero output gap, so stabilizing inflation has stabilized economic activity  There is no tradeoff between the dual objectives of stabilizing inflation and economic activity CAUSES OF INFLATIONARY MONETARY POLICY High employment targets and inflation The primary goal of most governments is high employment, and the pursuit of this goal can bring high inflation Two types of inflation can result from an activist stabilization policy to promote high employment: Cost-push inflation results either from a temporary negative supply shock or a push by workers for wage hikes beyond what productivity gains can justify Demand-pull inflation results from policymakers pursuing policies that increase aggregate demand We will now use aggregate high employment target on both types of inflation demand and supply analysis to examine the effect of a CAUSES OF INFLATIONARY MONETARY POLICY High employment targets and inflation Cost-Push Inflation FIGURE LRAS Inflation Rate, π Consider the economy, which is initially at point 1, the intersection of the aggregate demand curve AD1 and the short-run aggregate AS2 supply curve AS1 AS1 Suppose workers succeed in pushing for higher wages or they expect inflation to be high and wish their wages to keep up with it This cost- π2' push shock, which acts like a temporary negative supply shock, raises π1 2’ the inflation rate and shifts the short-run aggregate supply curve up and to the left to AS2 AD1 Y’ Y P Aggregate Output, Y If the central bank takes no action to change the equilibrium interest rate and the monetary policy curve remains unchanged The economy would move to point 2’ at the intersection of the new short-run aggregate supply curve AS2 and the aggregate demand curve AD1 Output would decline to Y’ below potential output and the inflation rate would rise to π2, leading to an increase in unemployment CAUSES OF INFLATIONARY MONETARY POLICY High employment targets and inflation Cost-Push Inflation Activist policymakers with a high employment target would implement policies, such as a cut in taxes, an increase in government purchases, or FIGURE LRAS Inflation Rate, π AS4 AS3 an autonomous easing of monetary policy, to increase aggregate demand These policies would shift the aggregate demand curve to AD2 quickly returning the economy to potential output at point and increasing the inflation rate to π2 π4 AS2 4’ π3 AS1 3’ π2 π2' 2’ π1 AD4 AD3 AD2 AD1 The workers’ success might encourage them to seek even higher wages In Y’ Y P Aggregate Output, Y addition, other workers might now realize that their wages have fallen relative to their fellow workers, leading them to seek wage increases Another temporary Activist policies once again to shift the aggregate demand curve rightward negative supply shock would occur that would cause the short-run aggregate to AD3 and return the economy to full employment at a higher inflation rate supply curve to shift up and to the left again, to AS3 Unemployment develops of π3 If this process continues, the result will be a continuing increase in again when we move to point 3’ inflation—a cost-push inflation CAUSES OF INFLATIONARY MONETARY POLICY High employment targets and inflation FIGURE 10 LRAS Inflation Rate, π Demand-Pull Inflation AS1 When policymakers mistakenly underestimate the natural rate of unemployment and so set a target for unemployment that is too low, they set the stage for expansionary monetary policy that produces inflation 2’ π1 AD2 AD1 Y P T Y Aggregate Output, Y If policymakers have set a unemployment target that is below the natural To hit the unemployment target, policymakers must enact policies such as expansionary P rate of unemployment (Y ), they will be trying to achieve an output target fiscal policy or an autonomous easing of monetary policy to increase aggregate T greater than potential output (Y ) Suppose that we are initially at point 1: demand The aggregate demand curve shifts to the right until it reaches AD2 and the T The economy is at potential output but below the target level of output Y T economy moves to point 2’, where output is at Y and policymakers have achieved the unemployment rate goal CAUSES OF INFLATIONARY MONETARY POLICY High employment targets and inflation FIGURE 10 LRAS Inflation Rate, π AS4 Demand-Pull Inflation AS3 T At Y , the unemployment rate is below the natural rate level, and output is above potential, causing wages to rise The short-run π4 aggregate supply curve will shift up and to the left, eventually to π3 AS2 4’ AS1 AS2, moving the economy from point 2’ to point 2, where it is back at potential output but at a higher inflation rate of π 3’ π2 2’ π1 AD4 AD3 AD2 AD1 We could stop there, but because unemployment is again higher than Y P T Y Aggregate Output, Y the target level, policymakers would once more shift the aggregate demand curve rightward to AD3 to hit the output target at point 3’ Policymakers fail on two counts: They have not achieved their unemployment target and have caused higher inflation If, however, the target rate of unemployment is below the natural rate, the process we see in Figure 10 will be well under way before they realize their mistake The whole process would continue to drive the economy to point and beyond The overall result is a steadily rising inflation rate CAUSES OF INFLATIONARY MONETARY POLICY High employment targets and inflation Cost-Push Versus Demand-Pull Inflation Cost-Push Inflation Demand-Pull Inflation LRAS LRAS Inflation Rate, π AS4 AS4 AS3 π4 AS3 π4 AS2 AS2 4’ 4’ π3 AS1 π3 AS1 3’ 3’ π2 π2' π2 2’ 2’ π1 AD4 π1 AD4 AD3 AD3 AD2 AD2 AD1 Y’ Y P Aggregate Output, Y AD1 Y P T Y Aggregate Output, Y We would normally expect to see demand-pull inflation when unemployment is below the natural rate level, and cost-push inflation when unemployment is above the natural rate level Unfortunately, economists and policymakers still struggle with measuring the natural rate of unemployment Complicating matters further, a cost-push inflation can be initiated by a demandpull inflation, blurring the distinction When a demand-pull inflation produces higher inflation rates, expected inflation will eventually rise and cause workers to demand higher wages (costpush inflation) so that their real wages not fall Finally, expansionary monetary and fiscal policies produce both kinds of inflation, so we cannot distinguish between them on this basis CAUSES OF INFLATIONARY MONETARY POLICY High employment targets and inflation APPLICATION – GREAT INFLATION Before the Great Inflation started, the inflation rate was below 2% at an annual rate; by the late 1970s, it averaged around 8% and peaked at nearly 14% in 1980 after the oil price shock in 1979 This insight suggests that in 1965–1973, the U.S economy experienced the demand-pull inflation we described in Figure 10 That is, policymakers pursued a policy of autonomous monetary policy easing that shifted the aggregate demand curve to the right in trying to achieve an output target that was too high, thus increasing inflation CAUSES OF INFLATIONARY MONETARY POLICY High employment targets and inflation APPLICATION – GREAT INFLATION After 1975, the unemployment rate lingered above the natural rate of paneunemployment, yet inflation continued, as per l (a), indicating the phenomenon of a cost-push inflation we described in Figure The public’s knowledge that government policy was aimed squarely at high employment explains the persistence of inflation The higher rate of expected inflation from the demandpull inflation shifted the short-run aggregate supply curve in Figure upward and to the left, causing a rise in unemployment that policymakers tried to eliminate by autonomously easing monetary policy, shifting the aggregate demand curve to the right The result was a continuing rise in inflation SUMMARY For aggregate demand shocks and permanent supply shocks the price stability and economic activity stability objectives are consistent: Stabilizing inflation stabilizes economic activity even in the short run For temporary supply shocks, however, there is a tradeoff between stabilizing inflation and stabilizing economic activity in the short run In the long run, however, no conflict arises between stabilizing inflation and economic activity Activists regard the self-correcting mechanism through wage and price adjustment as very slow and hence see the need for the government to pursue active, accommodating policy to address high unemployment when it develops Nonactivists, by contrast, believe that the self-correcting mechanism is fast and therefore advocate that the government avoid activepolicy to eliminate unemployment SUMMARY Milton Friedman’s view that in the long-run inflation is always and everywhere a monetary phenomenon is borne out by aggregate demand and supply analysis: It shows that monetary policymakers can target any inflation rate in the long run they want through autonomous monetary policy, which adjusts the equilibrium real interest rate using the federal funds rate policy tool to change the level of aggregate demand Two types of inflation can result from an activist stabilization policy to promote high employment: costpush inflation, which occurs because of negative supply shocks or a push by workers to get higher wages than is justified by productivity gains; and demand-pull inflation, which results when policymakers pursue high output and employment targets through policies that increase aggregate demand Both demand-pull and costpush inflation led to the Great Inflation from 1965 to 1982 CHÍNH SÁCH TIỀN TỆ KHÔNG PHẢI LÀ “CÂY ĐŨA THẦN CỦA NỀN KINH TẾ VIỆT NAM Ổn định giá trị đồng tiền có ý nghĩa kinh tế? Trong kinh tế thị trường đại, định chế tài lành mạnh hệ thống toán vận hành hiệu giá trị đồng tiền không ổn định, chí dao động liên tục giá trị đồng tiền xói mòn dần thịnh vượng quốc gia Mức độ dao động không kiểm soát làm cho kinh tế phải đối mặt với hai thách thức lớn lạm phát giảm phát Và hậu thách thức phá vỡ mục tiêu vĩ mô quốc gia  Ổn định giá trị đồng tiền có ý nghĩa quan trọng kinh tế, giúp thúc đẩy tăng trưởng kinh tế, ổn định kinh tế vĩ mô (việc làm, thu nhập, công bằng, an sinh xã hội), tăng cường vị đối ngoại kinh tế, hay nói ngắn gọn ổn định giá trị đồng tiền giúp cho kinh tế đạt mục tiêu vĩ mô góp phần củng cố sức mạnh kinh tế CHÍNH SÁCH TIỀN TỆ KHÔNG PHẢI LÀ “CÂY ĐŨA THẦN CỦA NỀN KINH TẾ VIỆT NAM Năm 2011 tình hình kinh tế giới có nhiều diễn biến phức tạp, kinh tế chủ chốt phục hồi chậm chạp, khủng hoảng nợ công khu vực Châu Âu lan rộng, biến động địa - trị Bắc Phi Trung Cận Đông có khả gây ảnh hưởng lâu dài đến kinh tế - xã hội giới, giá lương thực thực phẩm lượng giới tiếp tục gia tăng Các tiêu kinh tế vĩ mô cho thấy, kinh tế đứng trước cân đối lớn: Tăng trưởng kinh tế đạt 5,89%, tốc độ tăng CPI 18,13%, thâm hụt ngân sách 5%, thâm hụt thương mại lớn Bên cạnh đó, kinh tế bộc lộ nhiều yếu kém, hiệu đầu tư thấp, thị trường tài ẩn chứa nhiều bất ổn  Thực thi CSTT theo xu hướng chặt chẽ, linh hoạt năm 2012 Khi lạm phát có xu hướng giảm, từ tháng 3/2012 NHNN kịp thời giảm mặt lãi suất liên tiếp: Điều chỉnh giảm lần lãi suất tái cấp vốn từ 15% xuống 10%,lãi suất chiết khấu từ từ 13% xuống 8% Và ngày 24 tháng 12 tiếp tục hạn thấp mức lãi suất đạo thêm 1% Lãi suất thị trường mở giảm lần Điều chỉnh giảm lần trần lãi suất tiền gửi tối đa VND 14%/năm xuống 9%/năm cuối tháng 12% tiếp tục hạ xuống 8% tiền gửi có kỳ hạn từ tháng đến 12 tháng; từ 6%/năm xuống 2%/năm tiền gửi không kỳ hạn CHÍNH SÁCH TIỀN TỆ KHÔNG PHẢI LÀ “CÂY ĐŨA THẦN CỦA NỀN KINH TẾ VIỆT NAM Lý thuyết tăng trưởng kinh tế khẳng định, có yếu tố định tăng trưởng kinh tế là: lao động, vốn , đất đai công nghệ Để thúc đẩy tăng trưởng kinh tế vững chắc, cần sử dụng có hiệu yếu tố Vốn yếu tố, vốn từ hệ thống ngân hàng kênh số nhiều kênh khác để tăng trưởng kinh tế , vốn từ ngân sách, vốn vay nước vốn tự có doanh nghiệp… Nới lỏng hay thắt chặt cung tiền qua công cụ CSTT, làm giảm tăng lãi suất kinh tế qua khuyến khích hay hạn chế hệ thống ngân hàng cho vay kinh tế ( doanh nghiệp đến vay ngân hàng), qua có tác động đến tăng trưởng kinh tế ngắn hạn  Chính sách tiền tệ sử dụng để kiểm soát lạm phát hiệu sử dụng để thúc đẩy tăng trưởng ??? CHÍNH SÁCH TIỀN TỆ KHÔNG PHẢI LÀ “CÂY ĐŨA THẦN” CỦA NỀN KINH TẾ VIỆT NAM Độ trễ sách tiền tệ đòi hỏi tính kiên định mục tiêu phối hợp sách ? Ở nước có thị trường phát triển, khoảng thời gian từ NHTW thay đổi mức lãi suất đạo đến NHTM thay đổi lãi suất kinh tế phải từ 1-3 tháng  Khả dự báo tốt nhân tố tác động làm thay đổi dự báo lạm phát tương lai để NHTW kịp thời điều chỉnh sách Quá trình điều hành cần thiết phải kiên định mục tiêu theo nhiệm vụ mà thân sách hướng tới tăng cường trao đổi, phối hợp đồng sách để hướng tới mục tiêu chung Cần thiết tăng cường tính linh hoạt, sáng tạo việc điều chỉnh phù hợp mục tiêu sách, sử dụng công cụ sách giai đoạn, chấp nhận đánh đổi mục tiêu định ngắn hạn để phản ứng nhanh chóng trước diễn biến bất thường kinh tế không quên mục tiêu, nhiệm vụ bản, tính quy luật sách Thank You ! ...CHAPTER 24: Monetary Policy Theory RESPONSE OF MONETARY POLICY TO SHOCKS HOW ACTIVELY SHOULD POLICYMAKERS TRY TO STABILIZE ECONOMIC ACTIVITY? INFLATION: ALWAYS AND EVERYWHERE A MONETARY PHENOMENON... INFLATIONARY MONETARY POLICY RESPONSE OF MONETARY POLICY TO SHOCKS The central goal of central banks • Price stability: The central bank pursues price stability is that monetary policy should... Y RESPONSE OF MONETARY POLICY TO SHOCKS Response to a permanent Supply Shock Inflation Rate, π LRAS1 LRAS3 AS3 No Policy Response AS2 If policymakers leave autonomous monetary policy unchanged,