国际货币与金融经济学课后习题答案 1.docx

国际货币与金融经济学课后习题答案 1.docx

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国际货币与金融经济学课后习题答案1

AnswerstoEndofChapterQuestions

Chapter1

KeepingUpWithaChangingWorld-TradeFlows,CapitalFlows,andtheBalanceOfPayments

1.Thebalanceonmerchandisetradeisthedifferencebetweenexportsofgoods,719andtheimportsofgoods,1,145,foradeficitof426.Thebalanceongoods,servicesandincomeis719+279+284–1145-210–269,foradeficitof342.Addingunilateraltransferstothisgivesacurrentaccountdeficitof391,[-342+（-49）=-391].（Notethatincomereceiptsarecreditsandincomepaymentsaredebits.）

2.Becausethecurrentaccountbalanceisadeficitof391,thenwithoutastatisticaldiscrepancy,thecapitalaccountisasurplusof391.Inthisproblem,however,thestatisticaldiscrepancyisrecordedasapositiveamount（credit）of11.Hence,thesumofthedebitsinthebalanceofpaymentsmustexceedthecreditsby11.So,thedeficitofthecurrentaccountmustbegreaterthanthesurplusonthecapitalaccountby11.Thecapitalaccount,therefore,isasurplusof391–11=380.

3.Abalance-of-paymentsequilibriumiswhenthedebitsandcreditsinthecurrentaccountandtheprivatecapitalaccountsumtozero.Intheproblemabovewedonotknowtheprivatecapitalaccountbalance.Wecannotsay,therefore,whetherthiscountryisexperiencingabalance-of-paymentssurplusordeficitorifitisinequilibrium.

4Thecurrentaccountisadeficitof$541,830andtheprivatecapitalaccountbalanceisasurplusof$369,068.TheU.S.,therefore,hasabalanceofpaymentsdeficit.

5Positiveaspectsofbeinganetdebtorincludethepossibilityoffinancingdomesticinvestmentthatisnotpossiblethroughdomesticsavings;therebyallowingfordomesticcapitalstockgrowthwhichmayallowjob,productivity,andincomegrowth.Negativeaspectsincludethefactthatforeignsavingsmaybeusedtofinancedomesticconsumptionratherthandomesticsavings;whichwillcompromisethegrowthsuggestedabove.

Positiveaspectsofbeinganetcreditorincludetheownershipofforeignassetswhichcanrepresentanincomeflowstothecreditingcountry.Further,thenetcreditorpositionalsoimpliesanetexportingposition.Anegativeaspectofbeinganetcreditorincludesthefactthatforeigninvestmentmaysubstitutefordomesticinvestment.

6Anationmaydesiretoreceivebothportfolioanddirectinvestmentduetothetypeofinvestmenteachrepresents.Portfolioinvestmentisafinancialinvestmentwhiledirectinvestmentisdominatedbythepurchaseofactual,real,productiveassets.Totheextentthatacountrycanbenefitbyeachtypeofinvestment,itwilldesirebothtypesofinvestment.Further,portfolioinvestmenttendstobeshort-runinnature,whileFDItendstobelong-runinnature.ThisisalsoaddressedinmuchgreaterdetailinChapter7.

7.DomesticSavings-DomesticInvestment=CurrentAccountBalance

DomesticSavings-DomesticInvestment=NetCapitalFlows

Therefore,CurrentAccountBalance=NetCapitalFlows

8Usingtheequationsabove,privatesavingsof5percentofincome,governmentsavingsof-1percent,andinvestmentexpendituresof10percentwouldresultsinacurrentaccountdeficitof6percentofincomeandacapitalaccountsurplus（netcapitalinflows）of6percentofincome.Thiscouldbecorrectedwithareductioninthegovernmentdeficit（toasurplus）and/oranincreaseinprivatesavings.

Chapter2

TheMarketforForeignExchange

1.Becauseitcostsfewerdollarstopurchaseaeuroaftertheexchangeratechange,theeurodepreciatedrelativetothedollar.Therateofdepreciation（inabsolutevalue）was[（1.2168–1.2201）/1.2201]100=0.27percent.

2.NotethattheratesprovidedaretheforeigncurrencypricesoftheU.S.dollar.Everyvaluehasbeenroundedtotwodecimalplaceswhichmaycausesomedifferencesinanswers.

A$

£

C$

Sfr

$

Australia

-

2.35

1.06

1.12

1.53

Britain

0.42

-

0.45

0.47

0.65

Canada

0.95

2.23

-

1.06

1.45

Switzerland

0.90

2.11

0.94

-

1.37

UnitedStates

0.65

1.54

0.69

0.73

-

3Thecrossrateis1.702/1.234=1.379（€/£）,whichissmallerinvaluethanthatobservedintheLondonmarket.Thearbitrageurwouldpurchase£587,544（$1,000,000/1.702）withthe$1millionintheNewYorkmarket.Nexttheywouldusethe£587,544inLondontopurchase€837,250（£587,544*1.425）.Finally,theywouldsellthe€837,250intheNewYorkmarketfor$1,033,167（€837,250*1.234）.Theprofitis#33,167.

4.Totaltradeis（163,681+160,829+261,180+210,590）=796,280.TradewiththeEuroareais（163,681+261,180）=424,861.TradewithCanadais（160,829+210,590）=371,419.Theweightassignedtotheeurois424,861/796,280=0.53andtheweightassignedtotheCanadiandollaris0.47.（Recalltheweightsmustsumtounity.）

Becausethebaseyearis2003,the2003EERis100.Thevalueofthe2004EERis:

[（0.82/0.88）•0.53+（1.56/1.59）•0.47]•100=（0.4939+0.4611）•100=95.4964,or95.5.Thisrepresentsa4.5percentdepreciationoftheU.S.dollar.

5Therealeffectiveexchangerate（REER）for2003isstill100.Therealratesofexchangeare,for2003,0.88•（116.2/111.3）=.9187,1.59•（116.2/111.7）=1.6541,andfor2004,0.82•（119.0/114.4）=0.8530,1.56•（119.0/115.6）=1.6059.Thevalueofthe2004REERis:

[（0.8530/0.9187）•0.53+（1.6059/1.6541）•0.47]•100=（0.4921+0.4563）•100=94.84,or94.8.Thisrepresentsa5.2percentdepreciationoftheU.S.dollarinrealterms

6.ThisisanominalappreciationoftheeurorelativetotheU.S.dollar.Thepercentchangeis[（1.19–1.05）/1.05]•100=13.3percent.

7.TheJanuary200realexchangerateis1.05•（107.5/112.7）=1.0016.TheMay2004realrateis1.19•（116.4/122.2）=1.1335.

8InrealtermstheeuroappreciatedrelativetotheU.S.dollar.Therateofappreciationis[（1.1335–1.0016）/1.0016]*100=13.17percent.

9AbsolutePPPsuggeststheMay2004exchangerateshouldbe122.2/116.4=1.0498.Theactualexchangerateis1.19.Hence,theeuroisovervaluedrelativetotheU.S.dollarby（1.19–1.0498）/1.0498]•100=13.35percent.

10RelativePPPcanbeusedtocalculateapredictedvalueoftheexchangerateas:

SPPP=1.05•[（122.2/112.7）/（116.4/107.5）]=1.0014.

11.Theactualexchangerateis1.19.Hence,theeuroisovervaluedrelativetotheU.S.dollarby（1.19–1.0014）/1.0014]•100=18.83percent.

Chapter3

ExchangeRateSystems,PasttoPresent

1.Rankingthevariousexchangeratearrangementsbyflexibilityisnotsoclearcut.Nonethelessthearrangementsdescribedinthischapterare（fromfixedtoflexible）:

dollarization,currencyboard,commodity（standard）peg,dollar（standard）peg,currencybasketpeg,crawlingpeg,managedfloat,flexible.

2.ThetwoprimaryfunctionsoftheInternationalMonetaryFundare:

surveillanceofmembernations'macroeconomicpolicies,andtoprovideliquiditytomembernationsexperiencingpaymentsimbalances.

3.ThevalueoftheCanadiandollarrelativetogoldisCAN$69（1.38•$50）andthevalueoftheBritishpoundrelativetogoldis£33.33（$50/1.50）.

4.TheexchangeratebetweentheCanadiandollarandtheBritishpoundisC$/£2.07（1.38•1.50）.

5.Thecurrencyvalueofthepesocanbeexpressedas$0.50+€.50=P1.Theexchangeratebetweenthedollarandtheeurocanbeusedtoconverttheeuroamounttoitsdollarequivalentof$0.55.Hence,$1.05=P1,orandexchangevalueof0.952P/$.Usingtheexchangeratebetweenthedollarandtheeuroagain,theexchangeratebetweenthepesoandtheeurois0.1.048P/€（0.952P/$•1.10$/€）.

6.Because$1.05isthecurrencycontentofthebasket,asshownabove,and$0.50ofthatcontentisattributabletothedollar,theweightassignedtothedollaris0.50/1.05=0.476,or47.6percent.Becausetheweightsmustsumtounity,theweightassignedtotheeurois52.4percent.

7.Themaindifferencebetweenthetwosystemswasthat,intheSmithsoniansystem,thedollarwasnotpeggedtothevalueofgold.OnereasonthatthesystemwasshortwasbecausetherewaslittleconfidencethatU.S.economicpolicywouldbeconductedinamannerconducivetoasystemofpeggedexchangerates.

8.Theprincipleresponsibilitiesofacurrencyboardaretoissuedomesticcurrencynotesandpegthevalueofthedomesticcurrency.Acurrencyboardisnotallowedtopurchasedomesticdebt,actasalenderoflastresort,orsetreserverequirements.

9.TheLourveaccordestablishedunofficiallimitsoncurrencyvaluemovements.Inasense,itwaspegwithbandsforeachofthemaincurrencies（dollar,yenandmark）.

10.Differencesinthefundamentaldeterminantsofcurrencyvaluesbetweenthepeggingcountryandtheothercountryshouldbeconsidered.Tothispointofthetext,therateofinflationisagoodexample.RelativePPPcanbeusedtodeterminetherateofcrawl.

11.Underacurrencyboardsystem,anationstillmaintainsitsdomesticcurrency.Hence,policymakerscanchangeexchangeratepoliciesandmonetarypoliciesiftheysodesire.Whenanationdollarizesanddisposesofitsdomesticcurrencyitnolongerhasthisoption.

Chapter4

TheForwardCurrencyMarketandInternationalFinancialArbitrage

1.Giventhattheexchangerateisexpressedasdollarstoeuros,wetreatthedollarasthedomesticcurrency.Notealsothatinterestratesarequotedonanannualbasiseventhoughthematurityperiodisonlyonemonth.Inthisproblemwedividetheinterestratesby12toputthemonaone-monthbasis.

a.Theinterestratedifferential,therefore,is（1.75%/12-3.25%/12）=-0.125%.Theforwardpremium/discount,expressedasapercentage,iscalculatedas:

（（F-S）/S）•100=（（1.089–1.072）/1.072）•100=1.5858%

b.Transactioncostsareshowninthefigureabovebythedashedlinesthatinterestthehorizontala