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Journal articles on the topic 'Contractionary Monetary Policy'

Author: Grafiati

Published: 5 June 2025

Last updated: 15 July 2025

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1

Famoroti, Jonathan Olusegun, and Omolade Adeleke. "Analysis of Wamz’s Economic Growth and Monetary Policy Using the Markov Switching Approach." International Journal of Research and Innovation in Social Science VII, no. IV (2023): 142–56. http://dx.doi.org/10.47772/ijriss.2023.7411.

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This study investigates the impact of monetary policy shocks in two regimes of the business cycles (contractionary and expansion regimes) in 4 countries in the West African monetary zone (WAMZ). It employs the Markov switching model, using quarterly data for the period 1980Q1 to 2020Q4. Our findings show that the countries have common business cycles. In addition, the study offered enough evidence that the significant effects of the monetary instruments are significantly more potent in contractionary than expansionary regimes. Furthermore, on the aggregate, the zone appears to have an average

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2

Gu, Yumeng, and Sanjay R. Singh. "Distribution of Market Power, Endogenous Growth, and Monetary Policy." Federal Reserve Bank of San Francisco, Working Paper Series 2024, no. 09 (2024): 01–85. http://dx.doi.org/10.24148/wp2024-09.

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We incorporate incumbent innovation in a Keynesian growth framework to generate an endogenous distribution of market power across firms. Existing firms increase markups over time through successful innovation. Entrant innovation disrupts the accumulation of market power by incumbents. Using this environment, we highlight a novel misallocation channel for monetary policy. A contractionary monetary policy shock causes an increase in markup dispersion across firms by discouraging entrant innovation relative to incumbent innovation. We characterize the circumstances when contractionary monetary po

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3

Aastveit, Knut Are, and André K. Anundsen. "Asymmetric Effects of Monetary Policy in Regional Housing Markets." American Economic Journal: Macroeconomics 14, no. 4 (2022): 499–529. http://dx.doi.org/10.1257/mac.20190011.

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The responsiveness of house prices to monetary policy shocks depends on the nature of the shock—expansionary versus contractionary—and on local housing supply elasticities. These findings are established using a panel of 263 US metropolitan areas. Expansionary monetary policy shocks have a larger impact on house prices in supply-inelastic areas. Contractionary shocks are orthogonal to housing supply elasticities. In supply-elastic areas, contractionary shocks have a greater impact on house prices than expansionary shocks do. The opposite holds true in supply-inelastic areas. We attribute this

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4

Mallick, Sushanta K., and Ricardo M. Sousa. "REAL EFFECTS OF MONETARY POLICY IN LARGE EMERGING ECONOMIES." Macroeconomic Dynamics 16, S2 (2011): 190–212. http://dx.doi.org/10.1017/s1365100511000319.

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This paper provides evidence on monetary policy transmission for five key emerging market economies: Brazil, Russia, India, China, and South Africa. Monetary policy (interest rate) shocks are identified using modern Bayesian methods along with the more recent sign restrictions approach. We find that contractionary monetary policy has a strong and negative effect on output. We also show that such contractionary monetary policy shocks do tend to stabilize inflation in these countries in the short term, while producing a strongly persistent negative effect on real equity prices. Overall, the impu

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5

Kim, Soyoung. "Effects of Monetary Policy Shocks on the Exchange Rate in the Republic of Korea: Capital Flows in Stock and Bond Markets." Asian Development Review 31, no. 1 (2014): 121–35. http://dx.doi.org/10.1162/adev_a_00023.

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Several studies have suggested that the prediction of standard theory on the effects of monetary policy on the exchange rate might not be applicable to or in the case of the Republic of Korea because participation of foreign investors is weak in the bond market but strong in the stock market. The current study examines the effects of monetary policy shocks on the exchange rate in the Republic of Korea by using structural vector autoregression models with sign restrictions. To determine the channels by which monetary policy shocks affect the exchange rate, I investigate the effects on various c

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6

Killins, Robert. "The Influence of Monetary Policy on Equity and Volatility Indices in the U.S. and Canada." International Journal of Economics and Finance 8, no. 4 (2016): 132. http://dx.doi.org/10.5539/ijef.v8n4p132.

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This paper investigates the reaction of equity and volatility indices in the U.S. and Canada to changes in monetary policy by each respective country. The results confirm previous literature that suggests contractionary changes in monetary policy in the U.S. results in downward pressure on U.S. equity indices. Additionally, this research finds that monetary policy changes do not have any significant impact on the volatilely index in the U.S. (VIX). The results from the Canadian data show a much different picture. Contractionary changes of monetary policy in both Canada and the U.S. seem to dri

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Tetik, Metin, and Mustafa Ozan Yıldırım. "Distortionary effects of economic crises on policy coordination in Turkey: Threshold GMM approach." Economics and Business Review 7, no. 3 (2021): 83–102. http://dx.doi.org/10.18559/ebr.2021.3.6.

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This study investigates the interaction between fiscal and monetary policies and how crises affect the coordination between policymakers in Turkey. This study’s novelty is that a nonlinear Taylor rule indicating monetary policy response function is estimated based on the Threshold Generalized Method of Moments (Threshold GMM) methodology over the period January 2006—March 2020. The empirical findings reveal that when fiscal policy has an expansionary stage, especially in crises times, the policy interest rate does not react significantly to the inflation gap, output gap and real effective exch

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8

Giuli, Francesco, and Massimiliano Tancioni. "CONTRACTIONARY TECHNOLOGY SHOCKS." Macroeconomic Dynamics 21, no. 7 (2017): 1752–89. http://dx.doi.org/10.1017/s1365100515001054.

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This paper adds to the large body of literature on the effects of technology shocks empirically and theoretically. Using a structural vector error correction model, we first provide evidence that not only hours but also investment decline temporarily following a technology improvement. This result is robust to important data and identification issues addressed in the literature. We then show that the negative response of inputs is consistent with an estimated monetary model in which the presence of strategic complementarity in price setting, in addition to nominal rigidities, lowers the sensit

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9

Tenreyro, Silvana, and Gregory Thwaites. "Pushing on a String: US Monetary Policy Is Less Powerful in Recessions." American Economic Journal: Macroeconomics 8, no. 4 (2016): 43–74. http://dx.doi.org/10.1257/mac.20150016.

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We investigate how the response of the US economy to monetary policy shocks depends on the state of the business cycle. The effects of monetary policy are less powerful in recessions, especially for durables expenditure and business investment. The asymmetry relates to how fast the economy is growing, rather than to the level of resource utilization. There is some evidence that fiscal policy has counteracted monetary policy in recessions but reinforced it in booms. We also find evidence that contractionary policy shocks are more powerful than expansionary shocks, but contractionary shocks have

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10

EREN, Murat, and Selim BAŞAR. "Para Politikasının Büyüme Üzerindeki Etkisinde Kurumsal Yapının Rolü: Farklı Gelir Düzeyindeki Ülkeler Üzerine Bir Uygulama." Sosyoekonomi 31, no. 58 (2023): 61–80. http://dx.doi.org/10.17233/sosyoekonomi.2023.04.03.

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In this study, the impact of monetary policy on growth is discussed within the institutional framework for countries with different income levels. The findings from the GMM estimator showed that the effect of contractionary monetary policy on growth is negative in all countries. On the other hand, it is concluded that the impact of all institutional indicators is positive in high and upper-middle-income countries and that the increase in institutional quality reduces the adverse effects of contractionary monetary policy on growth. In terms of lower-middle-income countries, the effects of some

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11

WAGAN, Zulfiqar Ali, Zhang CHEN, Seelro HAKIMZADI, and Muhammad Sanaullah SHAH. "Assessing the effect of monetary policy on agricultural growth and food prices." Agricultural Economics (Zemědělská ekonomika) 64, No. 11 (2018): 499–507. http://dx.doi.org/10.17221/295/2017-agricecon.

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Agricultural growth is closely associated with sustainable economic development. This is especially true from the perspective of developing countries, such as India and Pakistan, where significant portions of the labour force are dependent on agriculture for their livelihood. This study analysed the impact of macroeconomic policy (i.e. monetary policy) on employment, food inflation, and agricultural growth by analysing to what extent monetary policy is effective in controlling food price inflation, the effect of contractionary monetary policy on the agricultural sector’s employment and product

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12

Fabris, Nikola. "Monetary Policy Between Stability and Growth." Journal of Central Banking Theory and Practice 13, no. 1 (2024): 27–42. http://dx.doi.org/10.2478/jcbtp-2024-0002.

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Abstract The global financial crisis and the coronavirus pandemic were marked by expansionary policies of key central banks in an attempt to stop the recession. The degree of expansiveness of monetary policy was unprecedented. As a result of expansionary policies, global inflation has been present since 2021. The change in the macroeconomic environment has led to a turnaround in monetary policy pursuits and a rapid rise in reference interest rates. The FED reacted much faster than the ECB and that is why inflation was lower in the USA compared to the euro area. All announcements for 2023 point

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13

Igityan, Haykaz. "Asymmetric Effects of Monetary Policy on the Armenian Economy." Russian Journal of Money and Finance 80, no. 1 (2021): 46–103. http://dx.doi.org/10.31477/rjmf.202101.46.

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Whether inflation and output respond symmetrically or asymmetrically to the same size of contractionary and expansionary monetary policy shock has important policy implications. This paper shows the presence of asymmetric responses in Armenian inflation and output to positive and negative monetary policy shocks of the same size by employing econometric models. Contractionary policy decreases inflation less than expansionary policy increases it. Output reacts in the opposite way. An estimated small open economy DSGE model with sticky wages and investment adjustment costs explains about half of

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14

Tosun, Bengü, and Selim Başar. "Financial Fragility in Developing Countries: An Analysis in the Context of Monetary Policy and Central Bank Independence¹." Journal of Central Banking Theory and Practice 13, no. 1 (2024): 89–116. http://dx.doi.org/10.2478/jcbtp-2024-0005.

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Abstract This study aims to examine the effects of monetary policies implemented by developed countries and central bank independence of developing countries on the financial fragility of developing countries. According to the findings, it was seen that the contractionary monetary policies implemented by the central banks of developed countries increase the financial fragility for both groups of countries, as do the change of central bank governors. However, the change in governors strengthens positive effects of contractionary monetary policies on the financial fragility.

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15

Rivai, Aswin. "The monetary policy impact on agricultural growth and food prices." International Journal of Research in Business and Social Science (2147- 4478) 11, no. 9 (2022): 158–65. http://dx.doi.org/10.20525/ijrbs.v11i9.2234.

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Agricultural growth is closely associated with sustainable economic development. This is especially true from the perspective of developing countries, such as Indonesia and Pakistan, where significant portions of the labour force are dependent on agriculture for their livelihood. This paper aims to examine the effects of macroeconomic policy (i.e. monetary policy) on employment, food inflation, and agricultural growth by analysing to what extent monetary policy is effective in controlling food price inflation, the effect of contractionary monetary policy on the agricultural sector’s employment

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16

D. Kaya, Halil, and Nancy L. Lumpkin-Sowers. "Does Fed policy affect blockholder behavior in U.S. publicly traded firms?" Investment Management and Financial Innovations 14, no. 1 (2017): 153–59. http://dx.doi.org/10.21511/imfi.14(1-1).2017.01.

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This paper documents the empirical relationship between ownership concentration and monetary policy to fill out the picture for when ownership concentration is likely to change within U.S. publicly traded firms. Our sample is drawn from the Dlugosz et al. (2006) data set for firms between 1996 and 2001. The authors explore the patterns between the Federal Reserve’s policy position and ownership concentration rather than asserting causal direction between the two. This empirical paper tests alternative theories on blockholder activism by examining whether “voice” or “exit” is more dominant unde

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17

Nelson, Benjamin, Gabor Pinter, and Konstantinos Theodoridis. "Do contractionary monetary policy shocks expand shadow banking?" Journal of Applied Econometrics 33, no. 2 (2017): 198–211. http://dx.doi.org/10.1002/jae.2594.

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18

Cevik, Serhan, Alice Fan, and Sadhna Naik. "Monetary Shocks and Labor Markets." IMF Working Papers 2025, no. 058 (2025): 1. https://doi.org/10.5089/9798229004251.001.

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Central banks conduct monetary policy to achieve price stability, but decisions also have effects on labor-market outcomes. In this paper, we identify exogenous monetary shocks with the ‘interest rate surprise’ approach based on high-frequency changes in forward-looking interest rates and use daily data on online job vacancy postings to investigate the impact of monetary policy on labor markets in three European countries (Estonia, Latvia and Lithuania) during the period 2018–2024. Our results indicate that monetary policy exerts significant and durable effects on labor-market conditions as me

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19

Oke, David Mautin, and Ismail Aremu Muhammed. "Monetary Policy Shocks and Unemployment in Emerging Market Economies in Africa." Journal of Developing Areas 57, no. 4 (2023): 257–70. http://dx.doi.org/10.1353/jda.2023.a908656.

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ABSTRACT: Unemployment remains a global challenge that requires additional ways of dealing with it. Therefore, the role of Reserve or Central Banks in reducing unemployment is of recent seeking more attention. This paper examines monetary policy shocks and unemployment nexus in the emerging market economies in Africa. The models of this study are designed within the panel vector autoregressive (PVAR) framework. The models majorly rely on the New Keynesian model. Given the nominal rigidities of the New Keynesian model, the monetary policy can therefore, serve as an important tool which can have

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20

Ongan, Serdar, and Ismet Gocer. "Money Supply Determination Process for Japan." Journal of Central Banking Theory and Practice 12, no. 1 (2023): 249–61. http://dx.doi.org/10.2478/jcbtp-2023-0011.

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Abstract This study re-investigates the money supply determination process for Japan. The methodology of this study, which differs from previous studies, is constructed on the assumption of potential nonlinear (asymmetric) relations between money supply and monetary base via money multiplier. To this aim, the nonlinear autoregressive distributed lag (ARDL) model by Shin, Yu and Greenwood-Nimmo, (2014) is applied. This model allows us to examine the endogeneity and exogeneity of the money supply determination process via the linkage of the money multiplier under expansionary and contractionary

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21

Romer, Christina D., and David H. Romer. "Presidential Address: Does Monetary Policy Matter? The Narrative Approach after 35 Years." American Economic Review 113, no. 6 (2023): 1395–423. http://dx.doi.org/10.1257/aer.113.6.1395.

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The narrative approach to macroeconomic identification uses qualitative sources, such as newspapers or government records, to provide information that can help establish causal relationships. This paper discusses the requirements for rigorous narrative analysis using fresh research on the impact of monetary policy as the focal application. We read the historical Minutes and Transcripts of Federal Reserve policymaking meetings to identify significant contractionary and expansionary changes in monetary policy not taken in response to current or prospective developments in real activity for the p

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22

Dias, Daniel A., and Joao B. Duarte. "Monetary Policy and Homeownership: Empirical Evidence, Theory, and Policy Implications." International Finance Discussion Paper 2022, no. 1344 (2022): 1–66. http://dx.doi.org/10.17016/ifdp.2022.1344.

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We show that monetary policy affects homeownership decisions and argue that this effect is an important and overlooked channel of monetary policy transmission. We first document that monetary policy shocks are a substantial driver of fluctuations in the U.S. homeownership rate and that monetary policy affects households' housing tenure choices. We then develop and calibrate a two-agent New Keynesian model that can replicate the estimated transmission of monetary policy shocks to homeownership rates and housing rents. We find that the calibrated model provides an explanation to the "price puzzl

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23

Olisah, Remigius. "MONETARY AND FISCAL POLICY COORDINATION IN NIGERIA." Social Science and Law Journal of Policy Review and Development Strategies 8, no. 1 (2021): 116–32. http://dx.doi.org/10.48028/iiprds/ssljprds.v8.i1.09.

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This paper seeks to examine monetary and fiscal policy coordination in Nigeria. It discussed monetary policy as expansionary or contractionary, showing the various tools of monetary policy instruments in the country. Data are generated from secondary sources and evaluated through content analysis. The study is anchored by the Monetarist theory of inflation. Various literature examined shows that with declining oil prices and production challenges in an oil-dependent economy, achieving the growth projection requires better coordination of fiscal and monetary policies in a way that supports the

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24

Ndikumana, Léonce. "Implications of Monetary Policy for Credit and Investment in Sub-Saharan African Countries." Journal of African Development 18, no. 2 (2016): 1–18. http://dx.doi.org/10.5325/jafrideve.18.2.0001.

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This paper investigates the implications of monetary policy for domestic investment through its effects on bank lending to the private sector and interest rates in sub-Saharan African countries. The study argues that the pursuit of inflation control through contractionary monetary policy carries high costs in terms of reduced investment and ultimately slower economic growth. The econometric evidence based on a sample of 37 sub-Saharan African countries over 1980-2012 shows that contractionary monetary policy affects domestic investment negatively both indirectly through the bank lending or qua

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Shareef, Ameen Omar, and K. P. Prabheesh. "DOES INTERNATIONAL MONETARY POLICY INFLUENCE THE BANK RISK? EVIDENCE FROM INDIA." Buletin Ekonomi Moneter dan Perbankan 25, no. 2 (2022): 135–54. http://dx.doi.org/10.21098/bemp.v25i2.1867.

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This study empirically examines the impact of international monetary policy on bank risk in the Indian context. Using annual data from 64 banks and employing panel OLS and GMM techniques, this study finds that: (1) a contractionary international monetary policy increases bank risk; (2) an appreciation of the domestic exchange rate induces bank riskiness; (3) the domestic monetary policy affects bank risk through the “search for yield” channel; and (4) the international monetary policy is relatively significant in explaining the bank riskiness in the post-global financial crisis period.

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Miranda-Agrippino, Silvia, and Giovanni Ricco. "The Transmission of Monetary Policy Shocks." American Economic Journal: Macroeconomics 13, no. 3 (2021): 74–107. http://dx.doi.org/10.1257/mac.20180124.

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Commonly used instruments for the identification of monetary policy disturbances are likely to combine the true policy shock with information about the state of the economy due to the information disclosed through the policy action. We show that this signaling effect of monetary policy can give rise to the empirical puzzles reported in the literature, and propose a new high-frequency instrument for monetary policy shocks that accounts for informational rigidities. We find that a monetary tightening is unequivocally contractionary, with deterioration of domestic demand, labor and credit market

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Chima Kenneth Anachedo, Jisike Jude Okonkwo, Elechi Sarah Jeff-Anyeneh, and Chisom Njideka Ezeaku. "Healthy interaction between fiscal and monetary policies; A panacea for economic development and sustainability." World Journal of Advanced Research and Reviews 15, no. 1 (2022): 708–18. http://dx.doi.org/10.30574/wjarr.2022.15.1.0741.

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A healthy fiscal and monetary policies form the basis for economic growth and sustainability of an economy. This work seeks to look at the effect of monetary and fiscal policies on economic growth in Nigeria, to examine how government tax alter the effect of monetary policy, To see how interaction of government recurrent expenditure with monetary policy does alter the effect of monetary policy rate, money supply and inflation on economic growth in Nigeria, and to see if the interaction of government capital expenditure with monetary policy affects monetary policy rate, money supply and inflati

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Chima, Kenneth Anachedo, Jude Okonkwo Jisike, Sarah Jeff-Anyeneh Elechi, and Njideka Ezeaku Chisom. "Healthy interaction between fiscal and monetary policies; A panacea for economic development and sustainability." World Journal of Advanced Research and Reviews 15, no. 1 (2022): 708–18. https://doi.org/10.5281/zenodo.7746181.

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A healthy fiscal and monetary policies form the basis for economic growth and sustainability of an economy. This work seeks to look at the effect of monetary and fiscal policies on economic growth in Nigeria, to examine how government tax alter the effect of monetary policy, To see how interaction of government recurrent expenditure with monetary policy does alter the effect of monetary policy rate, money supply and inflation on economic growth in Nigeria, and to see if the interaction of government capital expenditure with monetary policy affects monetary policy rate, money supply and inflati

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Jackson, Kieren. "Monetary policy and wealth inequality." Australian Economic Papers 63, S1 (2024): 3–12. http://dx.doi.org/10.1111/1467-8454.12344.

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AbstractThis thesis examines how monetary policy shocks affect wealth inequality in Australia. I analyse how a monetary policy shock, through asset price responses, affects household balance sheets and wealth inequality measures. I find that contractionary monetary policy reduces the wealth gap, but also disproportionately increases the wealth share of the most affluent Australians. This is driven largely by the response of house prices to an increase in the central bank's policy rate. I use a novel methodology to overcome the data limitations that usually impede studies of wealth inequality,

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Jiang, Fu. "The impact of monetary policy on economic growth in the context of globalization." Yashil iqtisodiyot va taraqqiyot 2, no. 12 (2024): 17–22. https://doi.org/10.5281/zenodo.14640680.

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This article examines the impact of monetary policy on economic growth in the context of globalization. Itexplores the key types and instruments of monetary policy, including expansionary and contractionary policies, interestrates, and open market operations. Case studies from the United States, the European Central Bank, and Japan illustratethe influence of global economic events on national economies.

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Parlaktuna, Inci, and Ayuba Napari. "Monetary Policy and Income Inequality in Ghana." Research in Applied Economics 11, no. 4 (2019): 49. http://dx.doi.org/10.5296/rae.v11i4.16001.

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Monetary policy, even if minimal and uncertain regarding the direction of impact, has been found to have distributional effects especially in the developed world. The purpose of this study is to determine the impact monetary policy has on income inequality in Ghana which can be a case study for a developing African Economy with independent monetary policy. Data for the period 2002Q1 to 2013Q4 is used. The study used the Impulse Response Functions (IRFs) by Local Projections methodology in estimating the degree and direction of impact of monetary policy on income distribution in Ghana. From the

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Sharma, Chandan, and Rajat Setia. "Effects of Monetary Shocks on Exchange Rate: Empirical Evidence from India." Studies in Business and Economics 12, no. 2 (2017): 206–19. http://dx.doi.org/10.1515/sbe-2017-0030.

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Abstract This paper examines the effect of monetary policy shocks on exchange rate in a Multiple Indicator Approach (MIA) framework. This study has employed a monetary policy index of key monetary policy instruments in India (Bank rate, Cash Reserve Ratio, Repo and Reverse Repo rates). The study finds the empirical evidence for puzzling behavior of price level and exchange rate. Both price and exchange rate increase initially in response to a contractionary policy shock. Policy shocks affect output, inflation and exchange rate to an appreciable extent over a forecasting horizon of one year.

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Ogunade, Olayinka, Olasunkanmi Oseni, and Adewale Tella. "Effect of Monetary Policies on Economic Performance of Anglophone ECOWAS." Journal of Economics and Policy Analysis 7, no. 2 (2022): 35–49. https://doi.org/10.52968/25748415.

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Although there have been efforts to advance the ECOWAS monetary cooperation agenda, political issues, and other economic concerns in some of the region's nations have hampered the progress to date. Part of the disagreement is associated with inadequate literature that lends experimental proof to monetary policy management for optimal gains. Therefore, this study seeks to examine the relationship between monetary policy strategies and economic performance in Anglophone ECOWAS. The study employed an ex-post facto research design. Secondary annual panel data from 1986 to 2020 for all the five (5)

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Hussain, Shahid, Abdul Rasheed, and Mahmoona Mahmood. "DYNAMICS OF MONETARY POLICY IMPACT ON INITIAL PUBLIC OFFERING: INSIGHTS FROM THE PAKISTAN STOCK EXCHANGE." DECEMBER 02, no. 02 (2023): 143–51. http://dx.doi.org/10.53664/jssd/02-02-2023-02-143-151.

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This study explores heterochthonous monetary shocks' effect on the initial public offering market, employing excessive-frequency identity approach. Saengchote and Sthienchoak (2020) databank include 190 SBP official statement between 2001 and 2020. Modifications in 3-months fed futures, which can be negatively associated with Standard and Poor 500 within thirty-min window (15-minutes earlier, 15-minutes later) immediate SBP official statements, are categorized as traditional shocks. Contractionary shocks within the traditional logic cause a drop in the initial public offering undertaking. Oppo

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Adelakun, Ojo Johnson, and Karima Yousfi. "Monetary Policy Shocks and Macroeconomic Fundamentals in South Africa." Emerging Economies Cases Journal 2, no. 1 (2020): 7–14. http://dx.doi.org/10.1177/2516604220919117.

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This South African case study controls for the fiscal side of the economy using government borrowing as a potential accelerator of asymmetry in a monetary function that follows Taylor’s rule. Through the linear and non-linear ARDL framework, we find significant asymmetry effects of monetary policy on output and inflation, respectively. We also find government borrowing as an important underlying source of asymmetries in the response of macroeconomic fundamentals to monetary policy shocks in South Africa. Thus, we recommend that monetary authorities consider not only the effectiveness or otherw

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Deekor, LeeLee N. "Impact of Monetary Policy Shocks on Macroeconomic Fundamentals: The Role of Asymmetry and Uncertainty in Nigeria." Advances in Social Sciences Research Journal 6, no. 11 (2019): 110–29. http://dx.doi.org/10.14738/assrj.611.7235.

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That monetary policy is made in an environment of substantial uncertainty is only a commonplace knowledge. But for the peculiar vulnerability of monetary authorities to exogenous conditions in developing economies, we hypothesized for the role of uncertainty in the asymmetry effect of monetary policy. Essentially, we explore both money supply and interest rate process using linear and non-linear ARDL to show that political pressure such as variability in government borrowing has the potential to accelerate the asymmetry effect of monetary policy. We also observe the asymmetry effect of monetar

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Dzhagityan, E. P., and O. R. Mukhametov. "The effect of the ECB’s unconventional monetary policy on systemic risks in the eurozone." Voprosy Ekonomiki, no. 12 (December 5, 2023): 86–102. http://dx.doi.org/10.32609/0042-8736-2023-12-86-102.

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Systemic risks in the framework of central banks’ unconventional monetary policy (UMP) have so far received little attention in the modern economic literature. Based on evidence from the UMP of the European Central Bank (ECB), we contribute to this research area by differentiating systemic risks between materialized systemic risks (financial stress) and their potential level (expected capital shortfall in the banking system during crises). Besides, our paper assesses the asymmetric effects of expansionary and contractionary UMP. The empirical analysis covers the period from 2009 to 2022 and ap

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Fang, Xianming, and Yu Jiang. "Impact of the joint-stock reform of commercial banks on the effectiveness of monetary policy in China." Panoeconomicus 63, no. 3 (2016): 325–38. http://dx.doi.org/10.2298/pan1603325f.

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Over the past decade, the Chinese government has conducted the joint-stock reform of state-owned commercial banks. The joint-stock reform improves the marketization level of the ownership structure of commercial banks and consequently leads to impacts on the effectiveness of monetary policy. This paper first presents the impacting mechanisms of the joint-stock reform of commercial banks on the effectiveness of monetary policy and then constructs an empirical model to test those impacts. The empirical results show that the increasing degree of joint-stock reform of commercial banks enhances the

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Tiunova, Marina. "The Monetary Policy Impact on the Dynamics of Russia’s Real Economy." Moscow University Economics Bulletin 2017, no. 3 (2017): 80–108. http://dx.doi.org/10.38050/01300105201735.

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The article examines the influence of monetary policy of the Bank of Russia on the dynamics of real GDP and its components, real wages and employment from 2003 to 2016. Using the Bayesian structural vector autoregression model (BSVAR) with recent dataset, the paper provides the calculation of the extent of changes in the main Russia’s real sector indicators in response to monetary policy, money base and exchange rate shocks. The analysis allows to conclude that monetary policy leads to real variables changes in Russia. The expected contractionary monetary policy of the Central Bank of Russia w

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Chen, Kaiji, Jue Ren, and Tao Zha. "The Nexus of Monetary Policy and Shadow Banking in China." American Economic Review 108, no. 12 (2018): 3891–936. http://dx.doi.org/10.1257/aer.20170133.

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We study how monetary policy in China influences banks’ shadow banking activities. We develop and estimate the endogenously switching monetary policy rule that is based on institutional facts and at the same time tractable in the spirit of Taylor (1993). This development, along with two newly constructed micro banking datasets, enables us to establish the following empirical evidence. Contractionary monetary policy during 2009–2015 caused shadow banking loans to rise rapidly, offsetting the expected decline of traditional bank loans and hampering the effectiveness of monetary policy on total b

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MONTANÉ, MARTÍN, EMILIANO LIBMAN, and GUIDO ZACK. "Contractionary depreciations in Latin America during the 2000s." Brazilian Journal of Political Economy 41, no. 4 (2021): 723–44. http://dx.doi.org/10.1590/0101-31572021-3196.

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ABSTRACT This paper explores the effects of currency depreciations on output for the main Latin American countries that have been using Inflation Targeting for almost two decades. We construct VAR models for Brazil, Chile, Colombia, Mexico and Peru for the last two decades and we find that depreciations have short-run contractionary effects in Brazil and Mexico. We illustrate some of the policy implications of that finding by building a simple model, and we show that contractionary effects of depreciations may have destabilizing effects when monetary policy is conducted using a standard Taylor

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Jacobson, Margaret M., Christian Matthes, and Todd B. Walker. "Temporal Aggregation Bias and Monetary Policy Transmission." Finance and Economics Discussion Series, no. 2022-054r1 (April 2023): 1–35. http://dx.doi.org/10.17016/feds.2022.054r1.

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Temporal aggregation biases estimates of monetary policy effects. We hypothesize that information mismatches between private agents and the econometrician—the source of temporal aggregationbias—are as important as the more studied mismatch between private agents and the centralbank (the “Fed information effect”) in the study of monetary policy transmission. In impulse responsesfrom both local projections and an unobserved components model, we find that the responseof daily inflation to high-frequency monetary shocks confirms theoretical predictions. If thereis an adverse-signed response such t

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Javed, Farhan, Muhammad Sohail Alam Khan, and Brekhna Gul. "Asymmetric Effects of Monetary Policy Shocks on Output Growth: Evidence from Nonlinear ARDL and Hatemi-J Causality Tests." Global Economics Review IV, no. IV (2019): 157–81. http://dx.doi.org/10.31703/ger.2019(iv-iv).14.

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Previous studies relied on asymmetric or a linear approach while considering the output response of monetary policy shocks. However, empirical results based on the symmetric approach tend to have masked the true effects of monetary policy shocks. The present study, therefore, aims to probe the asymmetric impact of monetary policy shocks on the output growth of selected developing economies. The empirical results indicate significant evidence of asymmetric effect both in the short run and in the long in almost all countries. Furthermore,compared to contractionary monetary policy, the findings i

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Kutu, Adebayo Augustine, and Harold Ngalawa. "Monetary Policy and Industrial Output in the BRICS Countries: A Markov-Switching Model." Folia Oeconomica Stetinensia 17, no. 2 (2017): 35–55. http://dx.doi.org/10.1515/foli-2017-0017.

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AbstractThis paper examines whether the five BRICS countries share similar business cycles and determines the probability of any of the countries moving from a contractionary regime to an expansionary regime. The study further examines the extent to which changes in monetary policy affect industrial output in expansions relative to contractions. Employing the Peersman and Smets (2001) Markov-Switching Model (MSM) and monthly data from 1994.01–2013.12, the study reveals that the five BRICS countries have similar business cycles. The results further demonstrate that the BRICS countries’ business

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Ahtiala, Pekka. "Monetary policy under flexible exchange rates: When is expansion contractionary?" International Review of Economics & Finance 7, no. 4 (1998): 361–78. http://dx.doi.org/10.1016/s1059-0560(98)90026-0.

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Lütkepohl, Helmut, and Aleksei Netšunajev. "The Relation between Monetary Policy and the Stock Market in Europe." Econometrics 6, no. 3 (2018): 36. http://dx.doi.org/10.3390/econometrics6030036.

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We use a cointegrated structural vector autoregressive model to investigate the relation between monetary policy in the euro area and the stock market. Since there may be an instantaneous causal relation, we consider long-run identifying restrictions for the structural shocks and also used (conditional) heteroscedasticity in the residuals for identification purposes. Heteroscedasticity is modelled by a Markov-switching mechanism. We find a plausible identification scheme for stock market and monetary policy shocks which is consistent with the second-order moment structure of the variables. The

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Dajčman, Silvo, Alenka Kavkler, Sergey Merzlyakov, Sergey E. Pekarski, and Dejan Romih. "International Transmission of Conventional and Unconventional Monetary Policy and Financial Stress Shocks from the Euro Area to Russia." Journal of Central Banking Theory and Practice 11, no. 1 (2022): 227–47. http://dx.doi.org/10.2478/jcbtp-2022-0010.

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Abstract This paper studies the international transmission of the euro area´s monetary policy and financial stress to Russia. The results show that financial stress in the euro area damages Russian economic activity and stock prices, but not its trade balance. The contractionary euro area monetary policy shock decreases Russian GDP, leads to real appreciation of the euro against the Russian rouble, damages Russian stock prices, but does not significantly affect the trade balance between countries. We also found that the Central Bank of the Russian Federation adjusts to monetary policy shocks i

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Zhang, Keyuan. "Research on the Relationship Between China's Monetary Policy and Inflation." Advances in Economics, Management and Political Sciences 146, no. 1 (2025): 26–30. https://doi.org/10.54254/2754-1169/2024.ld19052.

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Inflation is the phenomenon of a significant and sustained increase in the overall level of monetary prices of goods and services. If inflation gets out of control, it will undermine the credit foundation of society and Cause adverse effects on the economy. How to effectively control inflation while maintaining economic growth is an important challenge faced by monetary policy makers. Central banks often adopt contractionary monetary policies to control excessive inflation. China has taken measures such as tightening monetary policy and controlling credit in response to previous inflation inci

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Wolf, Christian K. "SVAR (Mis)Identification and the Real Effects of Monetary Policy Shocks." American Economic Journal: Macroeconomics 12, no. 4 (2020): 1–32. http://dx.doi.org/10.1257/mac.20180328.

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I argue that the seemingly disparate findings of the recent empirical literature on monetary policy transmission are all consistent with the same standard macro models. Weak sign restrictions, which suggest that contractionary monetary policy, if anything, boosts output, present as policy shocks what actually are expansionary demand and supply shocks. Classical zero restrictions are robust to such misidentification, but miss short-horizon effects. Two recent approaches—restrictions on Taylor rules and external instruments—instead work well. My findings suggest that empirical evidence is consis

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Coibion, Olivier. "Are the Effects of Monetary Policy Shocks Big or Small?" American Economic Journal: Macroeconomics 4, no. 2 (2012): 1–32. http://dx.doi.org/10.1257/mac.4.2.1.

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This paper studies the small estimated effects of monetary policy shocks from standard VARs versus the large effects from the Romer and Romer (2004) approach. The differences are driven by three factors: the different contractionary impetus, the period of reserves targeting, and lag length selection. Accounting for these factors, the real effects of policy shocks are consistent across approaches and most likely medium. Alternative monetary policy shock measures from estimated Taylor rules also yield medium-sized real effects and indicate that the historical contribution of monetary policy shoc

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