文档介绍：Intermediate Macroeconomics
Lecture 19
Money Supply
100%-reserve banking
Fractional-reserve banking
Money Supply
A model of money supply
The ary base: C+R
The reserve-deposit ratio: rr = R/D
The currency-deposit ratio: cr = C/D
Money supply: M = C + D
ary base: B = C + R
Money Supply
M/B = (C+D) / (C+R)
M/B = (cr+1) / (cr + rr)
M = [(cr+1) / (cr + rr)]*B
M = m * B
m: the money multiplier
Money Supply
Money supply depends on
ary base (B): +
Reserve-deposit ratio (rr): -
Currency-deposit ratio (cr): -
Money Supply
Instruments of ary policy
Open-market operation
Reserve requirement
Discount rate
Money Demand
Portfolio theories of money demand
--- the role as a store of value
--- offers a bination of risk and return than other assets (safe/normal return)
The D for M depends on the risk and return offered by M and by the various assets households can hold instead of M
Money Demand
Example:
Are portfolio theories useful for studying money D?
Depends…
Narrow measures of M ---
Broad measure of M --- plausible
M is a dominated asset
(as a store of value, it exists alongside other assets that are always better)
Money Demand
Transaction theories of money D
--- the role as a medium of exchange
--- best explains why people hold narrow measures of money
--- although returns are low, benefits of making transactions more convenient are important
Money Demand
Baumol-Tobin model of cash management
Money holding over the year
time
M holding
M holding
time
1
1
Y