国际货币与金融经济学课后习题答案.docx
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国际货币与金融经济学课后习题答案
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.
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.Transactioncostsareshowninthefigureabovebythedashedlinesthatinterestthehorizontalaxisatvaluesof-1.00and1.00.
c.Thepositivevalueindicatesthattheeuroissellingatapremium.Inaddition,theinterestratedifferentialfavorstheeuro-denominatedinstrument.Hence,asavershiftfundstoeuro-denominatedinstruments.
2.Usingtheprovidedinformation:
(1.75/12)–(3.25/12)<[(1.089-1.072/1.072)]?
100
-0.125%<1.5858%.
3.Thefourmarketsaregraphedb