【文章內(nèi)容簡(jiǎn)介】 But putting Greenspan (or his successor) into the picture restores much of the classical vision of the macroeconomy. Instead of an invisible hand pushing the economy toward full employment in some unspecified long run, we have the visible hand of the Fed pushing us toward its estimate of the noninflationary unemployment rate over the course of two or three years. Unit Six The Return of Depression Economics — Paul Krugman To an adherent of the neoclassical synthesis like myself, then, the really disturbing thing about the world’s current problems is not so much the possibility that they will spiral into a new Great Depression, which still remains unlikely and indeed seems to have receded in the last few months. Instead, the problem is that for the first time since the 1930s, we cannot be sure that governments can or will increase demand when we need it. The Unholy Trinity WHAT HAS gone wrong? On the face of it, there seem to be two quite separate issues: the problems of developing countries threatened with hot money flows and those of mature economies facing a “l(fā)iquidity trap.” Unit Six The Return of Depression Economics — Paul Krugman As the Bretton Woods system of fixed exchange rates that had governed postwar world moary affairs began to show signs of strain in the 1960s, a number of economists began to argue that there was a fundamental dilemma—or, more precisely, a “trilemma”—at the heart of international finance. Analysts such as the Canadian theorist Robert Mundell suggested that, as a fundamental matter of economic logic, countries could not get everything they want and that any exchange rate system involves sacrificing some important objectives to achieve others. Three conflicting objectives in particular, sometimes dubbed the “irreconcilable trinity,” have preoccupied wouldbe international financial architects. First, countries would like to retain scope for independent moary policy—that is, they would like to be able to cut interest rates to fight recessions and raise them to counter inflation. Unit Six The Return of Depression Economics — Paul Krugman more or less stable exchange rates because erratic fluctuations in the value of their currency create uncertainty for business and can sometimes cause severe disruptions to the financial system. Third, countries would like to maintain full convertibility—that is, they would like to assure businesses that money can be freely moved in or out of the country, if only to avoid the bureaucracy, paperwork, and opportunities for corruption inevitably associated with any attempt to limit capital movements. Alas, these objectives are indeed irreconcilable. The iron law of international finance is that countries can achieve at most two of the three. The logic of this law bees apparent when one considers what happens if a country tries to have it all. Suppose that a country, like the members of the European Moary System, were to maintain free capital mobility and also mit itself to keeping its exchange rate fixed, buying or selling its currency on the foreign exchange markets as necessary. Unit Six The Return of Depression Economics — Paul Krugman Could it cut interest rates to fight a recession? Not for long. If France were to try reducing its interest rates below German levels, investors, knowing that the exchange rate was fixed, would see a profit opportunity in the “carry trade.” That is, they would borrow in French francs, exchange the proceeds for Deutsche marks, and invest them in Germany. To prevent this increased supply of francs and demand for marks from driving down the value of its currency, the Bank of France would have to sell marks while buying francs itself. Even if the bank started with tens of billions of marks in its account, it would quickly find those reserves exhausted. At that point a choice would have to be made. France would either have to give up on its attempt to cut interest rates and abandon the goal of independent moary policy, or let the franc drop and give up on the goal of exchange rate stability. Alternatively, it could impose some kind of capital controls, limiting investors’ ability to convert francs into foreign currency. Unit Six The Return of Depression Economics — Paul Krugman The trilemma of international finance forces countries to c