国际经济学第九版英文课后答案_第16单元

The busi*CHAPTER 16

(Core Chapter)

THE PRICE ADJUSTMENT MECHANISM WITH FLEXIBLE

AND FIXED EXCHANGE RATES

OUTLINE

16.1 Introduction

16.2 Adjustment with Flexible Exchange Rates

16.2a Balance-of-Payments Adjustment with Exchange Rate Changes

16.2b Derivation of the Demand Curve for Foreign Exchange

16.2c Derivation of the Supply Curve for Foreign Exchange

16.3 Effect of Exchange Rate Changes on Domestic Prices and the Terms of Trade Case Study 16-1: Currency Depreciation and Inflation in Developing Countries 16.4 Stability of Foreign Exchange Markets

16.4a Stable and Unstable Foreign Exchange Markets

16.4b The Marshall-Lerner Condition

16.5 Elasticities in the Real World

16.5a Elasticity Estimates

16.5b The J-Curve Effect and Revised Elasticity Estimates

Case Study 16-2: Estimated Price Elasticities in International Trade

Case Study 16-3: Effective Exchange Rate of the Dollar and the U.S. Current Account Balance

Case Study 16-4: Dollar Depreciation and the U.S. Current Account Balance

Case Study 16-5: Exchange Rates and Current Account Balances During the European Financial Crisis of the Early 1990s

16.5c Currency Pass-Through

Case Study 16-6: Exchange Rate Pass-Through to Import Prices in Industrial Countries

16.6 Adjustment Under the Gold Standard

16.6a The Gold Standard

16.6b The Price-Specie-Flow Mechanism

Appendix: A16.1 The Effect of Exchange Rate Changes on Domestic Prices A16.2 Derivation of the Marshall-Lerner Condition

A16.3 Stability of Foreign Exchange Markets Once Again

A16.4 Derivation of the Gold Points and Gold Flows Under the Gold

Standard

Key Terms

Devaluation Gold standard

Dutch disease Mint parity

Stable foreign exchange market Gold export point

Unstable foreign exchange market Gold import point

Marshall-Lerner condition Price-specie flow mechanism

Elasticity pessimism Quantity theory of money

Identification problem Rules of the game of the gold standard

J-curve effect Currency board

Pass-through effect

Lecture Guide:

1. This is an important and challenging core chapter.

2. I would cover sections 1 and 2 in the first lecture. My experience is that students

find particularly difficult the derivation of the demand and supply curves for

foreign exchange. Therefore, I would explain the material in sections 16.2a and

16.2b very carefully and slowly. I would also assign problems 1 to 6.

3. I would cover sections 3 and 4 in the second lecture and pay special attention to

section 16.4b. I would also assign problems 7 to 9.

4. In the third lecture, I would present sections 5 and 6 and assign problems 10 to 1

5. Answer to Problems:

1. The nation's demand curve for imports is derived by the horizontal distance of the

nation's supply curve from the nation's demand curve of the tradable commodity

at each price below the equilibrium level of the tradable commodity. See Figure

1 on the next page.

2. The nation's supply curve for exports is derived by the horizontal distance of the

nation's demand curve from the nation's supply curve of the tradable commodity

at each price above the equilibrium level of the tradable commodity. See Figure

2.

3. A depreciation of the dollar shifts DM downward vertically and leaves PM (in

pounds) and the quantity of imports unchanged (see Figure 3).