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Cecilia, Onwuteaka, Ifeoma, Okoye, P. V. C, and Molokwu, Ifeoma Mirian. "Effect of Monetary Policy on Economic Growth in Nigeria." International Journal of Trend in Scientific Research and Development Volume-3, Issue-3 (April 30, 2019): 590–97. http://dx.doi.org/10.31142/ijtsrd22984.
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 productivity, and the extent of monetary policy transmission to money market rates and 10-year interest rates. We did so by applying a factor-augmented vector autoregressive model proposed by Bernanke et al. (2005) to agricultural data from 1995 and 1996 to 2016 for India and Pakistan, respectively. We found that tight monetary policy significantly reduced food inflation and agricultural production while increasing the rural unemployment rate. Short-term and 10-year interest rates increased owing to the contractionary monetary policies pursued by both countries. An inclusive monetary policy whereby policymakers work alongside governments to achieve price stabilisation and reasonable employment rates is recommended.
Harun, Syed M., M. Kabir Hassan, and Tarek S. Zaher. "Effect of Monetary Policy on Commercial Banks Across Different Business Conditions." Multinational Finance Journal 9, no. 1/2 (June 1, 2005): 99–128. http://dx.doi.org/10.17578/9-1/2-5.
The article provides a literature review of studies of the impact of monetary policy on income and wealth inequality. Based on the analysis and systematization of the articles mainly written over the past 25–30 years as well as articles written by central bank authorities, the main approaches to assessing the extent to which the Fed's actions are responsible for the growth of wealth inequality in the United States, which began in the 1970s, are identified. It was revealed that the relative unanimity of economists on this issue was replaced by significant pluralism of opinions after the crisis of 2007–2009. Among other reasons this was caused by the activity of central banks and their use of non-conventional approaches in conducting the monetary policy. In addition, the channels through which the actions of central banks affect the distribution of wealth in the economy are identified. In total, five such channels were singled out. Thus, changes in the monetary policy affect the debt market and the structure of assets and liabilities of households, while households with fixed incomes and with a high propensity to use cash are more likely to suffer losses during the expansionary monetary policy. And the fifth channel, which is less popular among the economists, the "Cantillon effect", leads to an increase in the wealth of the first recipients of the issued money at the expense of those who are farthest from the center of emission. The article provides empirical evidence of why this effect is significant for the American economy, and theoretical arguments indicating that taking the Cantillon effect into account can add certainty to studies of both monetary policy costs and institutional changes caused by rising inequality.
Hindrayani, Aniek, Fadikia K. Putri, and Inda F. Puspitasari. "Spillover Effect of US Monetary Policy to ASEAN Stock Market." Jurnal Economia 15, no. 2 (October 1, 2019): 232–42. http://dx.doi.org/10.21831/economia.v15i2.26314.
Abstract: This study analyzes the spillover effects of the US monetary policy on the ASEAN stock market with Markov switching model and investigates differences in empirical results of each country from ASEAN member. The results of this study have important implications for asset price allocation, specifically in the case of a transition between US and other small countries. The results showed that the ASEAN stock market is more affected by the US interest rates during bull-market than bear-markets. This can be seen from the increasing of stock market volatility during expansion comparing with recession period. Therefore, the stock markets of ASEAN countries will not be easily affected by the dollar rate during financial crisis or the recession period. Keywords: stock market, monetary policy, spillover effect, Markov-switching modelEfek Spillover pada Perubahan Kebijakan Moneter Amerika Terhadap Stock Market di ASEANAbstrak: Penelitian ini menganalisis efek spillover akibat adanya perubahan kebijakan moneter Amerika terhadap stock market di ASEAN dengan model Markov switching dan menginvestigasi terkait ada atau tidaknya perbedaan pada hasil empiris di setiap negara anggota ASEAN. Hasil penelitian ini memberikan implikasi penting bagi mekanisme transisi harga aset, khususnya dari Amerika terhadap negara dengan skala perekonomian kecil. Hasil penelitian menunjukkan bahwa stock market ASEAN lebih mudah terpengaruh oleh tingkat suku bunga Amerika pada saat kondisi bull-market dibandingkan saat bear-market. Hal ini dapat dilihat dari tingginya volatilitas stock market pada saat ekspansi dibandingkan saat periode resesi, sehingga stock market negara-negara ASEAN tidak akan mudah terpengaruh oleh dollar pada saat perekonomian mengalami krisis atau saat periode resesi. Kata kunci: stock market, kebijakan moneter, spillover effect, model Markov-switching
Wang, Yunqing, Qigui Zhu, and Jun Wu. "OIL PRICE SHOCKS, INFLATION, AND CHINESE MONETARY POLICY." Macroeconomic Dynamics 23, no. 1 (July 17, 2017): 1–28. http://dx.doi.org/10.1017/s1365100516001097.
This paper proposes a New Keynesian dynamic stochastic general equilibrium model of the Chinese economy incorporating the demand of oil to study the effects of oil price shocks on the business cycle. The model answers several questions, including how monetary policy should respond to the disturbances from such shocks, and whether monetary authorities should use core inflation or headline inflation including oil price inflation as the monetary policy rule. The contributions could be summarized as follows: First, the model reveals that the oil transmission mechanism is determined by the nominal inertia, income effect, and the portfolio allocation effect. Second, both noncore inflation monetary policy and core inflation monetary policy that are simultaneously pegged to oil prices fluctuations are inferior to the monetary policy purely pegged to core inflation. Our findings suggest that the monetary policy should focus on core inflation instead of headline inflation.
Geng, Zhongyuan, and Xue Zhai. "Monetary Policy Instruments and Bank Risks in China." International Journal of Asian Business and Information Management 4, no. 2 (April 2013): 57–71. http://dx.doi.org/10.4018/jabim.2013040105.
The authors use a panel data regression model to examine the effects of main monetary policy instruments on commercial bank risks in China from 1998 to 2011. The interest rate has a positive effect on bank risk while the interest rate margin, the reserve requirement ratio and open market operation have a negative effect. Among the three monetary policy instruments, the reserve requirement ratio has the greatest effect on bank risk, the interest rate (the interest rate margin) the second largest and the open market operation the weakest. Their findings provide guidance to the monetary authority and regulatory authorities in monetary policy and banking regulation in China.
Pan, Haifeng, and Dingsheng Zhang. "Coordination Effects and Optimal Policy Choices of Macroprudential Policy and Monetary Policy." Complexity 2020 (December 14, 2020): 1–11. http://dx.doi.org/10.1155/2020/9798063.
Considering three monetary policy rules, together with two endogenous macroprudential policies that are credit constraints (loan to value, LTV) for households and counter-cyclical capital (capital requirement ratio, CRR) for bankers, this paper establishes a dynamic stochastic general equilibrium (DSGE) model. Based on the welfare analysis of different combinations of macroprudential rules and monetary policy rules, this paper identifies the optimal policy combinations and analyzes the coordination effects between macroprudential policies and monetary policies. The results show that no matter what kind of monetary policy rules is implemented, the introduction of macroprudential rules has improved the level of total social welfare. In the optimal “two pillars” framework of monetary policies and macroprudential rules, the main objective of monetary policy is to stabilize price inflation, and the macroprudential policy to be implemented is the CRR macroprudential policy. This combination can effectively promote the stability of the real estate market, financial market, and macroeconomy, while maximizing the improvement of total social welfare.
Shobande, Olatunji Abdul, and Oladimeji Tomiwa Shodipe. "Monetary Policy Interdependency in Fisher Effect: A Comparative Evidence." Journal of Central Banking Theory and Practice 10, no. 1 (January 1, 2021): 203–26. http://dx.doi.org/10.2478/jcbtp-2021-0010.
Abstract In this paper, we examine the ability of Fisher effect to describe the subjective behaviour of monetary policy responses for nations constrained by global factors. We developed and estimated a simple DSGE model for appraising the consequence of an integrated financial market predictor on national monetary policy response in Africa’s largest economies – Nigeria and South Africa. The paper integrated the theoretical intuition of the famous Fisher effect on the New Keynesian DSGE model with global predictors to describe national monetary policy response as it influence domestic financial variables and macroeconomic fundamentals. Simulations show that the existence of global factors threatens the abilities of national monetary policy to predict financial variables and macroeconomic fundamentals in their economies.
Bui Thanh, Trung. "Monetary policy effect in an economy with heavily managed exchange rate." Journal of Asian Business and Economic Studies 24, no. 02 (April 1, 2017): 31–50. http://dx.doi.org/10.24311/jabes/2017.24.2.06.
The primary objective of this paper is to investigate the effect of monetary policy on macroeconomic variables in Vietnam, which is a small, open, and developing economy with heavily managed ex-change rate. Monetary policy shock is identified by the sign re-striction methodology. Unlike previous studies, this paper identifies a monetary contraction by a combination of an increase in interest rates, a decrease in central bank credit, a drop in the stock of foreign exchange reserves, and a fall in broad money. The empirical results show that output and prices begin to reduce after a restrictive mone-tary shock in the medium term, suggesting the adverse effect of monetary policy in the short term and the necessity to improve the transparency of monetary setting. Meanwhile, exchange rates are unresponsive to a tightening decision, which is not a sign of puzzle but plausible when the nature of a peg regime is taken into account. Furthermore, foreign exchange policy causes inflation to rise since its effect is partially sterilized by changes in monetary policy instru-ments. Therefore, Vietnamese monetary authorities should consider a shift toward a more floating regime to achieve monetary inde-pendence or foster the development of financial markets in order to alleviate inflationary pressure caused by foreign exchange policy.
Afsar, Muharrem, Aslı Afsar, and Emrah Dogan. "The Effect of Monetary Policy on Interest Rates in Turkey: A Microstructural Analysis." Business and Economic Research 7, no. 2 (October 1, 2017): 299. http://dx.doi.org/10.5296/ber.v7i2.11683.
The purpose of this study it to investigate the impact of monetary policy announcements by Central Bank of the Turkish Republic (CBRT) on market interest rates via micro variables on interest rates. In this context, this study investigated the relationship between monetary policy announcements and market interest rates for 2011:01-2015:10 term using GARCH model. The estimates have indicated that monetary policy announcements have different impacts on interest rate volatilities when distinguished as decisions on increasing, decreasing or fixing interest rates. It was found that contractionary monetary policy announcements have different impacts on market interest rates volatilities analyzed in the present study, while expansionary monetary policy announcements decrease the volatility on market interest rates. On the other hand, the announcements towards fixing the monetary policy increases the interest rate volatility of market interest rates. The results of the analysis also indicated that deposit interest rate weighted up to one year are affected the least by the monetary policy changes.
Eromosele, Harrison Ogbeide, and David Umoru. "DO FISCAL AND MONETARY POLICIES COOPERATE OR CONFLICT WITH EACH OTHER IN NIGERIAN ECONOMY?" SRIWIJAYA INTERNATIONAL JOURNAL OF DYNAMIC ECONOMICS AND BUSINESS 3, no. 1 (March 26, 2019): 15. http://dx.doi.org/10.29259/sijdeb.v3i1.15-30.
The determination for this study was to ascertain if fiscal and monetary policies are cooperating or rather conflicting with each other in Nigerian economy. Government disbursement and growth of money stock were used to denote fiscal and monetary policy variables. Two reduced form equations of monetary and fiscal policies were specified from underlying structural model. This yielded fourteen RF parameters in contrast to eleven structural parameters and so we had system of over-identification. These prompted use of IV estimators such as GMM and 3SLS. Estimates show similar findings for both estimators as we found evidence that fiscal policy does not respond favourably to monetary policy as monetary policy was found to have an insignificant effect on the fiscal policy. More so, fiscal policy does not respond to lag effect of monetary policy. Relatively, monetary policy responds favourably to fiscal policy. The lag effect of money supply was also found to have a significant impact on money supply. Empirical finding so upholds that Nigerian economy is fiscally overriding notwithstanding money being an integral part of all macroeconomic variables. Significance of lag effects of both fiscal and monetary policy is reflection that implementation process of both policies is excessively time overshadowing. Consequently, there is need for building well-organized units of fiscal and monetary authorities that can accelerate implementation process of these policies.
Eickmeier, Sandra, and Boris Hofmann. "MONETARY POLICY, HOUSING BOOMS, AND FINANCIAL (IM)BALANCES." Macroeconomic Dynamics 17, no. 4 (September 3, 2012): 830–60. http://dx.doi.org/10.1017/s1365100511000721.
This paper applies a factor-augmented vector autoregressive model to U.S. data with the aim of analyzing monetary transmission via private sector balance sheets, credit risk spreads, and house prices and of exploring the role of monetary policy in the housing and credit boom prior to the global financial crisis. We find that monetary policy shocks have a persistent effect on house prices, real estate wealth, and private sector debt and a strong short-lived effect on risk spreads in money and mortgage markets. Moreover, the results suggest that monetary policy contributed considerably to the unsustainable precrisis developments in housing and credit markets. Although monetary policy shocks contributed discernibly at a late stage of the boom, feedback effects of other (macroeconomic and financial) shocks via lower policy rates kicked in earlier and appear to have been considerable.
Salvary, Stanley C. W. "Monetary Policy And Not Monetary Control: A Rethinking." Journal of Applied Business Research (JABR) 14, no. 1 (September 1, 2011): 91. http://dx.doi.org/10.19030/jabr.v14i1.5731.
The view that prediction is the only important concern when policy is to be developed has led to the strict adherence to a money supply rule via the Quantity Theory of Money with its debilitating consequences. The monetarists place the emphasis on the level of the money supply in the determination of price level changes and monetary control is exercised. Along with this line of thinking, statistical elegance transcends empirical reality. Thus, the ensuing consequences of monetary control are not surprising. There are continuous increases in the general level of pries and increasing problems of unemployment, which fuel the flames of business downsizing. In this paper, an alternative to the monetarist explanation of the determination of the price level is advanced. The alternative explanation does not rely on changes in the supply of money but on changes in the composition of aggregate demand and supply. Absent monetary dislocation or revaluation of the currency, change in the general price level is attributed to the net effect of the realignment of relative prices. It is argued that a rethinking of the situation would results in monetary policy that is compatible with the economic setting and not monetary control which crowds out fiscal policy.
Zhong, Xiong, and Peng Xu. "Effectiveness Analysis on Regulation and Model of Monetary Policy." Applied Mechanics and Materials 651-653 (September 2014): 1557–61. http://dx.doi.org/10.4028/www.scientific.net/amm.651-653.1557.
The actual operation in monetary policy of China is usually indicated as discretion, which affects the stability of Chinese macro-economy, this paper uses DSEG model to study the supply effectiveness problem of Chinese monetary. The study shows that the middle transmission channel from adjustment in monetary supply to change in interest rate of market, the circulation effect produced by monetary policy and interest rate is weak, which influences the adjustment effect of monetary supply. So that it provides new measurement basis on the ineffective macro-economy effect of Chinese monetary supply.
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 (November 17, 2019): 110–29. http://dx.doi.org/10.14738/assrj.611.7235.
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 monetary policy to be sensitive to the choice of monetary policy indicator. These findings suggest that monetary authorities must consider not only the effectiveness or otherwise of monetary policy instruments to affect the target policy goals, but also the fact that not all the target variables react in a similar way to expansionary and contractionary monetary policy shocks.
Darma, Nazifi Abdullahi, and Ozovehe Abdulsalami. "An Empirical Analysis of The Effect of Monetary Policy on Inflation in Nigeria; 1970 – 2018." Advances in Social Sciences Research Journal 7, no. 6 (July 9, 2020): 841–59. http://dx.doi.org/10.14738/assrj.76.8239.
This study empirically analysed the effect of monetary policy on inflation in Nigeria; 1970 – 2018. The objective is to determine the effectiveness of monetary policy instruments on inflation in Nigeria. In doing this, relevant literature was reviewed and theoretical relationship between monetary policy and inflation was established following the quantity theory of money by Irving Fisher. The study employed time series data sourced from the statistical bulletin of Central bank of Nigeria (CBN) 2018. Stationarity test was also conducted on the time series data to determine the order of integration using Augmented Dickey Fuller (ADF) test. The unit root test revealed that inflation rate was stationary at level i.e. I(0) while monetary policy rate, treasury bill rate and cash reserve ratio were stationary at first difference i.e. I(1). The estimated results showed that there is cointegration between monetary policy variables and inflation rate in Nigeria. The results revealed that Monetary Policy Rate (MPR) was statistically significant in the short run after first difference, which indicates that monetary policy rate (MPR) exerts significant effect on inflation in Nigeria in the short run. Based on these findings, the study concluded that monetary policy variables alone are not sufficient enough in maintaining price stability in Nigeria. Therefore, the Federal government, Central Bank of Nigeria (CBN) and policy makers should simultaneously use monetary and fiscal policy instruments to maintain price stability in Nigeria.
We estimate the effects of anticipated and unanticipated monetary policy changes on jump variation by employing high-frequency nonparametric jump detection methods. We find that anticipated changes in the Fed funds have no significant effect on jumps. In contrast, jump variation in the price of financial market data increases with monetary policy surprises. We document evidence of asymmetries in the response of jumps to monetary policy changes. Monetary policy surprises and positive changes in the Fed target rate induce increments in jumps. Similar results exist in the sector analysis. In addition, this study uncovers no evidence of endogenous response between jumps and monetary policy surprises.
SHITILE, Tersoo Shimonkabir, and Abubakar SULE. "Welfare Effect of Monetary Financing." Applied Economics and Finance 6, no. 5 (August 13, 2019): 145. http://dx.doi.org/10.11114/aef.v6i5.4444.
This study ascertained the direction and asymmetric pass-through of central bank’s monetary financing to welfare in Nigeria using annual time series data covering the period 1970 to 2018. The study depended on both the Monetarist and Keynesian theoretical postulations to provide insights on the policy significance of monetary financing. To undertake the empirical analysis, the study applied both the linear Autoregressive Distributed Lag (ARDL) and non-linear ARDL (NARDL) technique. Unlike the ARDL equation, the estimated NARDL equation established that welfare losses respond negatively to both positive and negative changes in monetary financing; but the impact of negative monetary financing shock (7.11) is greater than the positive shock (2.87). In addition, the study found that it takes about 9 to 11 quarters for the changes in positive and negative monetary financing to fully release its effects on welfare loss. Besides, the results revealed that welfare loss is also driven by oil price, which is suggestive from oil price pass-through to domestic prices (exchange rate and consumer prices). The study, therefore, supports monetary financing in proper amounts and conditions to boost aggregate nominal demand but not to spur a fully-fledged monetary policy capture in the process.
Severe, Sean. "An empirical analysis of bank concentration and monetary policy effectiveness." Journal of Financial Economic Policy 8, no. 2 (May 3, 2016): 163–82. http://dx.doi.org/10.1108/jfep-08-2015-0045.
Purpose Substantial research has been conducted on the direct effects of banking competition or lack thereof. However, little work has investigated how the market structure of banks can affect the transmission of monetary policy. The purpose of this paper is to investigate to what degree bank concentration dampens or enhances the response of manufacturing to monetary policy changes. Design/methodology/approach To test how back concentration affects the transmission of monetary policy onto manufacturing value-added, the author regresses real value-added in manufacturing on bank concentration, monetary policy and the interaction of these two variables. The data set consists of a panel of 22 OECD countries across 59 manufacturing sectors from 1993 to 2005. Findings The author finds that bank concentration has two distinct effects: growth in manufacturing is lower in countries with higher concentration and manufacturing is less responsive to monetary policy as well. A loosening of monetary policy by lowering interest rates has a significantly larger effect on growth in countries with lower banking concentration. Overall, a 1 per cent decrease in the monetary policy interest rate increases industrial growth by 0.049 per cent when the three-bank concentration ratio is equal to the sample average, but the same monetary policy change has roughly twice the effect if bank concentration is only 5 per cent lower, all else equal. Originality/value The author is the first to measure how bank concentration alters the effectiveness of monetary policy using real economic activity as the output variable. The study is one of very few that has tied together inefficiencies created by bank concentration and the transmission of monetary policy.
Babangida, Jamilu S., and Asad-Ul I. Khan. "Effect of Monetary Policy on the Nigerian Stock Market: A Smooth Transition Autoregressive Approach." Central Bank of Nigeria Journal of Applied Statistics 12, No. 1 (August 16, 2021): 1–21. http://dx.doi.org/10.33429/cjas.12121.1/6.
This paper examines the nonlinear effect of monetary policy decisions on the performance of the Nigerian Stock Exchange market, by employing the Smooth Transition Autoregressive (STAR) model on monthly data from 2013 M4 to 2019 M12 for All Share Index and monetary policy instrument. This study considers the two regimes characterizing the stock market, which are the lower regime (the bear market) and the upper regime (the bull market). The results show evidence of nonlinear effect of monetary policy on the stock exchange market. Monetary policy rate, money supply, lagged monetary policy rate and lagged treasury bill rate are found to have significant positive effects on the stock exchange market in the lower regime while current treasury bill rate shows a negative effect. In the upper regime, money supply and lagged treasury bill rate have significant negative effect on the stock market. The current treasury bill rate is found to have a positive effect on the stock exchange market. It is recommended that the Central Bank of Nigeria should maintain a stable money supply growth that is consistent with increased activities in the Nigerian stock market.
Shokr, Mohamed Aseel, Zulkefly Abdul Karim, and Mohd Azlan Shah Zaidi. "Monetary policy and macroeconomic responses: non-recursive SVAR study of Egypt." Journal of Financial Economic Policy 11, no. 3 (August 5, 2019): 319–37. http://dx.doi.org/10.1108/jfep-07-2018-0103.
Purpose This paper aims to examine the effects of monetary policy and foreign shocks on output, inflation and exchange rate in Egypt. Design/methodology/approach This paper studies the effects of monetary policy and foreign shocks on output, inflation and exchange rate by using non-recursive SVAR model and quarterly data. Findings First, the empirical results reveal that monetary policy shocks, through changes in interest rate or money supply, have a significant effect on output, inflation and exchange rate in Egypt. Second, the world oil prices and foreign output have significant impacts on output, inflation and exchange rate in Egypt, while foreign interest rate has a significant effect on domestic output and inflation. Research limitations/implications The limitation of the study is examining one country only. Practical implications The Central Bank of Egypt (CBE) should adjust interest rate to stabilize inflation, output and exchange rate. By stabilizing inflation, output and exchange rate, the CBE would be able to achieve the ultimate targets of monetary policy, namely, price stability and economic growth. Social implications It is important for the CBE because it shows the significant effect of monetary policy on macroeconomic variables in Egypt. Also, it is important for people because it shows the important role for the CBE. Originality/value It is important for the CBE because it examines the effect of monetary policy and foreign shocks on macroeconomic variables.
Aboyadana, Gabriel. "Monetary policy and bank risk-taking in sub-Sahara Africa." European Journal of Applied Economics 18, no. 1 (2021): 15–38. http://dx.doi.org/10.5937/ejae18-28152.
Monetary policy has been shown to influence the risk-taking behaviour of banks in Europe and North America. Africa has however received limited attention in this regard. This study contributes to the monetary policy and bank risk-taking literature for sub-Sahara Africa by examining a panel of commercial banks from 2001-2015 for different types of risks. We find that monetary policy significantly influences bank risk-taking both statistically and economically, but the effect differs across the types of risks. Bank size and profitability are important in determining how effective monetary policy impacts risk-taking. The effects are stronger for countries without exchange rate controls. In terms of policies, monetary authorities intending to pursue expansionary monetary policy must remedy the risk-taking response by banks.
Widiastuti, Nur. "Dampak Kebijakan Moneter Pada Output Di Negara-Negara ASEAN Tahun 1980-2014." Jurnal Riset Manajemen Sekolah Tinggi Ilmu Ekonomi Widya Wiwaha Program Magister Manajemen 4, no. 1 (January 21, 2017): 58–70. http://dx.doi.org/10.32477/jrm.v4i1.191.
The Impact of monetary Policy on Ouput is an ambiguous. The results of previous empirical studies indicate that the impact can be a positive or negative relationship. The purpose of this study is to investigate the impact of monetary policy on Output more detail. The variables to estimatate monetery poicy are used state and board interest rate andrate. This research is conducted by Ordinary Least Square or Instrumental Variabel, method for 5 countries ASEAN. The state data are estimated for the period of 1980 – 2014. Based on the results, it can be concluded that the impact of monetary policy on Output shown are varied.Keyword: Monetary Policy, Output, Panel Data, Fixed Effects Model
Kim, Hyun-Hak, and Jai-Hyun Nahm. "Effect of Monetary Policy on Disaggregate Price Dynamics." Journal of Industrial Economics and Business 33, no. 5 (October 31, 2020): 1411–47. http://dx.doi.org/10.22558/jieb.2020.10.33.5.1411.
OKUR, Fatih, and Özgür Bayram SOYLU. "EFFECT OF MONETARY POLICY INSTRUMENTS ON SHADOW BANKING." Business & Management Studies: An International Journal 8, no. 3 (September 25, 2020): 2531–45. http://dx.doi.org/10.15295/bmij.v8i3.1442.
Shadow banks are financial mediators. There are maturity, credit, and liquidity transformation without access to central bank liquidity and public sector credit guarantees in their performance. The principle purpose of this study is to answer the question of the relationship between shadow banking and monetary policy, all financial activities that require a private or public payment guarantee other than traditional banking. This study analyses the short and long-term effects of national income, policy rate, CPI and money supply (M1) on shadow banking by using Panel ARDL method in selected ten countries throughout 2002-2016. The findings of the analysis point out that there is a short- and significant long-term relationship between the indicators discussed. Short-term PMG estimation results indicate that the long-term equilibrium will be reached over for approximately four years. Also, long-term PMG estimation results also pointed to the existence of a significant relationship between indicators, apart from national income. It is determined that the money supply and policy interest rate had a positive relation and the consumer price index had a negative relation with shadow banking.
Cenesizoglu, Tolga, and Badye Essid. "THE EFFECT OF MONETARY POLICY ON CREDIT SPREADS." Journal of Financial Research 35, no. 4 (December 2012): 581–613. http://dx.doi.org/10.1111/j.1475-6803.2012.01329.x.
E.A., Uju, and Ugochukwu P.O. "Effect of Monetary Policy on Industrial Growth in Nigeria." International Journal of Entrepreneurship and Business Innovation 4, no. 1 (June 7, 2021): 47–60. http://dx.doi.org/10.52589/ijebi-1z4iybye.
Monetary policy is one of the regulatory measures of the government to checkmate the money supply in the economy in order to achieve the desired level of prices, employment, output, and boost the industrial sector growth. Industrialization has always constituted a major focus of development strategy and government policy. One of the engines of industrialization is enhancing manufacturing sector capacity; this study adopted manufacturing sector output to examine the effect of monetary policy on industrial growth in Nigeria between 1986 and 2019. Data for the study were collected from the CBN Statistical bulletin, 2019 edition. A multiple regression model was developed and the Ordinary Least Square (OLS) regression technique employed for data analysis. The results showed that Open Market Operation (OMO) measured by Treasury bill rate had positive and significant effect on the Nigerian Manufacturing Domestic Sector Gross Product; Cash Reserve Ratio (CRR) has a positive and significant effect on the Nigerian Manufacturing Sector Gross Domestic Product; and Monetary Policy Rate (MPR) has a negative and significant effect on the Nigerian Manufacturing Sector Gross Domestic Product. The study concludes that monetary policy is a veritable tool for enhancing industrial sector growth in Nigeria. It was recommended that the monetary authority should ensure a lower MPR that can drive up investment and thus boost growth of the industry.
Jin, Xin, Mengting Li, and Tianxi Jin. "Research on the Conducting Effect of Monetary Policy on Stock Market Based on Investor Sentiment." International Journal of Trade, Economics and Finance 12, no. 3 (June 2020): 62–68. http://dx.doi.org/10.18178/ijtef.2021.12.3.695.
UFOEZE, Lawrence Olisaemeka, J. C. ODIMGBE, V. N. EZEABALISI, and Udoka Bernard ALAJEKWU. "EFFECT OF MONETARY POLICY ON ECONOMIC GROWTH IN NIGERIA: AN EMPIRICAL INVESTIGATION." Annals of Spiru Haret University. Economic Series 18, no. 1 (March 30, 2018): 123–40. http://dx.doi.org/10.26458/1815.
The study investigated effect of monetary policy on economic growth in Nigeria. The natural log of the GDP was used as the dependent variables against the explanatory monetary policy variables: monetary policy rate, money supply, exchange rate, lending rate and investment. The time series data is the market controlled period covering 1986 to 2016. The study adopted an Ordinary Least Squared technique and also conducted the unit root and co-integration tests. The study showed that long run relationship exists among the variables. Also, the core finding of this study showed that monetary policy rate, interest rate, and investment have insignificant positive effect on economic growth in Nigeria. Money supply however has significant positive effect on growth in Nigeria. Exchange rate has significant negative effect on GDP in Nigeria. Money supply and investment granger cause economic growth, while economic growth causes interest rate in Nigeria. On the overall, monetary policy explain 98% of the changes in economic growth in Nigeria. Thus, the study concluded that monetary policy can be effectively used to control Nigerian economy and thus a veritable tool for price stability and improve output.
Idowu, Onanuga, Ilo Bamidele, and Lucas Elumah. "Monetary and Fiscal Policies Interactions on Stock Returns in Nigeria." Binus Business Review 11, no. 1 (March 31, 2020): 17–24. http://dx.doi.org/10.21512/bbr.v11i1.6082.
This research examined the effects of monetary and fiscal policies on stock returns in Nigeria. The researchers utilized ex-post facto research design using the time series data of the annual market values of All Share Index (ASI) of the Nigerian Stock Exchange (NSE). It was yearly data on the various monetary policy and fiscal policy variables obtained from the Central Bank of Nigeria Statistical Bulletins covering from 1985 to 2017. The result of the cointegration test reveals a long-run relationship between monetary variables and stock returns. Meanwhile, the overall result shows that monetary policy has a significant effect on stock return. However, there is no long-run relationship between fiscal policy variables and stock returns. Meanwhile, the result of the Unrestricted Vector Autoregression model shows that fiscal policy has a significant effect on stock prices in Nigeria. On the other hand, a long-run relationship exists between monetary policy, fiscal policy, and stock returns. It has a significant effect on stock returns in Nigeria. This implies that monetary and fiscal policies have a significant effect on stock returns in Nigeria. It is recommended that there is a need for the federal government to harmonize fiscal and monetary policies in the same direction and to equally design policies that promote a free market for the growth of the Nigerian economy.
Ayomi, Sri, Eleonora Sofilda, Muhammad Zilal Hamzah, and Ari Mulianta Ginting. "The impact of monetary policy and bank competition on banking industry risk: A default analysis." Banks and Bank Systems 16, no. 1 (April 5, 2021): 205–15. http://dx.doi.org/10.21511/bbs.16(1).2021.18.
In the financial system and economy, the banking industry plays a crucial role. Default risk takes central stage in preserving financial stability and needs to be mitigated as it can trigger a crisis. The study examines the combined effects of monetary policy and bank competition on banking defaults. Using a sample of 95 commercial banks in Indonesia between 2009 and 2019, this study employs the Generalized Method of Moments, a two-step dynamic panel-data estimation system, to analyze it. Empirical estimation results show that monetary policy, through an increase in the benchmark interest rate, negatively affects probability of default. The extent of banking stability is also enhanced by monetary policy. Banking competition has a negative and significant effect on probability of default and has a positive effect on the banking distance to default. Furthermore, the combined impact of monetary policy and banking competition positively affects probability of default but has a negative impact on the distance of default. Building on this study, to promote a stable and more efficient banking system, policymakers should develop policies that foster complementary monetary and competition policies.
Klump, Rainer, and Anne Jurkat. "MONETARY POLICY, FACTOR SUBSTITUTION, AND CONVERGENCE." Macroeconomic Dynamics 22, no. 1 (August 3, 2016): 63–76. http://dx.doi.org/10.1017/s1365100516000481.
In this paper, we examine the influence of monetary policy on the speed of convergence in a standard monetary growth model à la Sidrauski allowing for differences in the elasticity of substitution between factors of production. The respective changes in the rate of convergence and its sensitivities to the central model parameters are derived both analytically and numerically. By normalizing the constant elasticity of substitution (CES) production functions both outside the steady state and within the steady state, it is possible to distinguish between an efficiency and a distribution effect of a change in the elasticity of substitution. We show that monetary policy is the more effective, the lower is the elasticity of substitution, and that the impact of monetary policy on the speed of convergence is mainly channeled via the efficiency effect.
Meder, Anthony A. "Interaction between Accounting Standards and Monetary Policy: The Effect of SFAS 115." Accounting Review 90, no. 5 (January 1, 2015): 2031–56. http://dx.doi.org/10.2308/accr-51029.
ABSTRACT I examine the effect of marketable security holdings on monetary policy when those securities are classified under SFAS 115. Prior research has shown that loan growth is negatively related to monetary contractions, and that marketable security holdings mitigate that negative relationship. Those studies consider the securities in aggregate; I am the first to consider the securities classification in conjunction with monetary policy. I ask whether held-to-maturity securities, relative to non-held-to-maturity securities, are negatively related to loan growth. I find that the held-to-maturity securities are more negatively related to loan growth, relative to non-held-to-maturity securities. I also find that held-to-maturity securities are incrementally more negatively related to loan growth during monetary tightening, relative to non-tightening times. Finally, I find that both of these effects are stronger for small banks, relative to large banks. Given the findings, I conclude that held-to-maturity securities actually enhance, not mitigate, the effect of monetary tightening on bank lending.
Hayford, Marc D. "Asymmetric Effects of Monetary Policy." Journal of Economic Asymmetries 3, no. 1 (June 2006): 59–86. http://dx.doi.org/10.1016/j.jeca.2006.01.004.
Nain, Zulquar, and Bandi Kamaiah. "Uncertainty and Effectiveness of Monetary Policy: A Bayesian Markov Switching-VAR Analysis." Journal of Central Banking Theory and Practice 9, s1 (July 1, 2020): 237–65. http://dx.doi.org/10.2478/jcbtp-2020-0030.
AbstractThere is a growing body of literature examining the effectiveness of the monetary policy on the macroeconomy in different contexts for developed and developing countries. However, lately, especially after the GFC, the focus of research shifted to examine the role of uncertainty in economic activity and on the monetary policy effectiveness. Both theoretical and empirical studies suggest that uncertainty does influence monetary policy effectiveness. However, until now, empirical studies are restricted to only developed countries. To this end, the present study examines the influence of uncertainty on monetary policy effectiveness for a developing country, namely India. We applied a non-linear VAR, which allows us to examine the effect of monetary policy shocks during high and low uncertainty periods. The results exhibit that uncertainty influences the effectiveness of monetary policy shocks. We find weaker effects of the monetary policy shocks during high uncertainty regime relative to low uncertainty regime.
Pericoli, Marcello, and Giovanni Veronese. "Monetary Policy Surprises over Time." Quarterly Journal of Finance 08, no. 01 (January 19, 2018): 1840002. http://dx.doi.org/10.1142/s2010139218400025.
We document how the impact of monetary surprises on euro-area and US financial markets has changed from 1999 to date. We use a definition of monetary policy surprises, which singles out movements in the long-end of the yield curve — rather than those changing nearby futures on the central bank reference rates. By focusing only on this component of monetary policy, our results are more comparable over time. We find a hump-shaped response of the yield curve to monetary policy surprises, both in the pre-crisis period and since 2013. During the crisis years, Fed path-surprises, largely through their effect on term premia, account for the impact on interest rates, which is found to be increasing in tenor. In the euro area, the path-surprises reflect the shifts in sovereign spreads, and have a large impact on the entire constellation of interest rates, exchange rates and equity markets.
Satria, Doni, and Solikin M. Juhro. "RISK BEHAVIOR IN THE TRANSMISSION MECHANISM OF MONETARY POLICY IN INDONESIA." Buletin Ekonomi Moneter dan Perbankan 13, no. 3 (May 30, 2011): 243–70. http://dx.doi.org/10.21098/bemp.v13i3.393.
This study explores interconnections between risk behaviour in the financial sector, particularly banking sector, with monetary policy stance. Referring Bernanke and Blinder (1988) modified model for analyzing the bank credit behavior, we develop an empirical model to test the role of risk behaviour in monetary policy transmission mechanism. Vector Error Correction Model are applied to test the significance of interaction between risk variables and monetary policy stance in the short run dynamics of credit behavior around its long-run cointegration with real GDP. Some empirical results emerge from this preliminary study. First, there is early indication that risk taking channel in the monetary policy transmission mechanism exists in Indonesia during analysis period. Second, risk variables and credit tend to move procyclicalyl while monetary policy stance tends to a-cyclical. Third, pro-cyclical behavior of credit and risk variables reverses the effect of loose monetary policy stance, and there is an indication of asymmetric effect between tight monetary policy and loose monetary policy in Indonesian economy. These empirical findings bring about policy recommencations for better understanding on the risk behavior in the banking sector, as well as integration beetween monetary dan financial sector policies.JEL Code : E52, E58,Keyword: Monetary Policy Transmission Mechanism, Monetary Policy Stance, Banking Risk Behavior, Risk Perception
Barrell, Ray, and Ian Hurst. "Monetary Policy and Global Imbalances." National Institute Economic Review 199 (January 1, 2007): 34–39. http://dx.doi.org/10.1177/0027950107077120.
The US current account imbalance has stayed stubbornly high despite the fall in the dollar that we have seen since the beginning of 2003. The exchange rate has fallen by around 15 per cent on average, mainly between the first quarter of 2003 and the first quarter of 2005. As we can see from figure 1, the fall has come in three steps, and each time it fell we might have expected an initial worsening of the current account for a year or so as prices change in advance of quantities (the J curve effect of the first year textbook). Hence we might have expected no sustained improvement until at least a year after the last downward step towards the end of 2004. However, as we can see from figure 2, there is no noticeable improvement in the current account during 2006, suggesting that domestic absorption was rising. At the same time inflation in the US was gradually drifting up under pressure from the weakening exchange rate.
Guimaraes, Bernardo, and Kevin D. Sheedy. "Sales and Monetary Policy." American Economic Review 101, no. 2 (April 1, 2011): 844–76. http://dx.doi.org/10.1257/aer.101.2.844.
A striking fact about pricing is the prevalence of “sales”: large temporary price cuts followed by prices returning to exactly their former levels. This paper builds a macroeconomic model with a rationale for sales based on firms facing customers with different price sensitivities. Even if firms can adjust sales without cost, monetary policy has large real effects owing to sales being strategic substitutes: a firm's incentive to have a sale is decreasing in the number of other firms having sales. Thus the flexibility seen in individual prices due to sales does not translate into flexibility of the aggregate price level. (JEL E13, E31, E52, L11, L25, L81, M31)
Paul, Pascal. "The Time-Varying Effect of Monetary Policy on Asset Prices." Review of Economics and Statistics 102, no. 4 (October 2020): 690–704. http://dx.doi.org/10.1162/rest_a_00840.
This paper studies how monetary policy jointly affects asset prices and the real economy in the United States. I develop an estimator that uses high-frequency surprises as a proxy for the structural monetary policy shocks. This is achieved by integrating the surprises into a vector autoregressive model as an exogenous variable. I use current short-term rate surprises because these are least affected by an information effect. When allowing for time-varying model parameters, I find that compared to the response of output, the reaction of stock and house prices to monetary policy shocks was particularly low before the 2007–2009 financial crisis.
Akinde, John Abiodun, and Elijah Oludayo. "MONETARY POLICY AND TELECOMMUNICATION OUTPUT IN NIGERIA." J-MACC : Journal of Management and Accounting 3, no. 2 (October 30, 2020): 62–73. http://dx.doi.org/10.52166/j-macc.v3i2.2070.
Different policies impact on the growth of the telecommunication sector in Nigeria. One of these policies which influence the expansion or contraction of the telecommunication output is monetary policy. To this end, this research examined the effect of monetary policy on telecommunication output in Nigeria. For the purpose of analysis, time series secondary data were sourced from Central Bank of Nigeria (CBN) statistical bulletin covering the periods1986 to 2018. Autoregressive Distributed Lag (ARDL) technique was employed after examining the stationarity of the data series using Augmented Dickey-Fuller technique. The bound co-integration test revealed that there is long run equilibrium between the monetary policy variables employed and telecommunication output. The ARDL result revealed that money supply had significant and positive effect on telecommunication output in the short and long run; liquidity ratio produced an insignificant and negative relationship with telecommunication output in the short run and insignificant positive effect in the long run; exchange rate had insignificant negative effect in the short run and a significant positive effect on telecommunication output in the long run; consumer price index had significant negative influence on telecommunication outputboth in the short run and long run. The study concluded that monetary policy stimulates telecommunication output in Nigeria. Thus, it was recommended that the monetary authority should pursue an expansionary monetary policy to sustain the positive influence of money supply on telecommunication output in Nigeria while rolling out policy to reduce the liquidity ratio of banks in the short run but increase it in the long run so that the long term favourable effect of liquidity ratio can be felt on telecommunication output.
Smolyansky, Michael, and Gustavo Suarez. "Monetary policy and the corporate bond market: How important is the Fed information effect?" Finance and Economics Discussion Series 2021, no. 009 (February 16, 2021): 1–37. http://dx.doi.org/10.17016/feds.2021.010.
Does expansionary monetary policy drive up prices of risky assets? Or, do investors interpret monetary policy easing as a signal that economic fundamentals are weaker than they previously believed, prompting riskier asset prices to fall? We test these competing hypotheses within the U.S. corporate bond market and find evidence strongly in favor of the second explanation—known as the "Fed information effect". Following an unanticipated monetary policy tightening (easing), returns on corporate bonds with higher credit risk outperform (underperform). We conclude that monetary policy surprises are predominantly interpreted by market participants as signaling information about the state of the economy.
Pestova, A. A. "On the effects of monetary policy in Russia: The role of the space of spanned shocks and the policy regime shifts." Voprosy Ekonomiki, no. 2 (February 28, 2018): 33–55. http://dx.doi.org/10.32609/0042-8736-2018-2-33-55.
This paper investigates the influence of monetary policy shocks in Russia on the basic macroeconomic and financial indicators. To identify the shocks of monetary policy, the Bayesian approach to the estimation of vector autoregressions (VARs) is applied, followed by extraction of the unexplained dynamics of monetary policy instruments (shocks) using both recursive identification and sign restrictions approach. The estimates show that the monetary policy shocks, apparently, cannot be attributed to the key drivers of cyclical movements in Russia, as they explain only less than 10% of the output variation and from 5 to10% of the prices variation. When applying recursive identification, no restraining effect of monetary policy on prices is found. Respective impact on output is negative and statistically significant in all identification procedures employed; however, the relative contribution of monetary shocks to output is not large. In addition, no significant effect of monetary policy tightening on the stabilization of the ruble exchange rate was found.
Ekeocha, Patterson C., and Elias A. Udeaja. "Spillover effect of United States Monetary Policy on Nigeria’s Financial and Macro Fundamentals." Central Bank of Nigeria Journal of Applied Statistics, Vol. 11 No. 1 (September 9, 2020): 111–45. http://dx.doi.org/10.33429/cjas.11120.5/5.
This paper examines spillover effects of U.S monetary policy on macroeconomic fundamentals in Nigeria from January 1985 to December 2018. The study period is partitioned to account for conventional monetary policy (CMP) period, January 1985 to August 2007 and unconventional monetary policy (UMP) period, September 2007 to December 2018. Guided by relevant pre-tests, we find BEKK-VARMA-CCCMGARCH as the most appropriate model. The study finds significant spillover effects of U.S CMP and UMP on interest rate, exchange rate and inflation rate in Nigeria. We, however, observe that while CMP may be a significant accelerator of shocks persistence on interest rates and exchange rates, the extent to which the UMP accelerate shocks in inflation rate tends to vary for different measures of quantitative easing. Thus, in addition to past own shocks and past own conditional variance of these macro fundamentals, understanding their dynamics cannot be in isolation of their vulnerability to external shocks and volatility due to spillover effects of monetary actions in other economies. In formulating monetary policy, it is therefore, imperative for the Central Bank of Nigeria to monitor the monetary policy process of the US to hedge against shocks spillovers.
Czeczeli, Vivien. "How Does Monetary Policy Affect Income Inequality? Evidence from Europe." Európai Tükör 24, no. 1 (July 15, 2021): 95–112. http://dx.doi.org/10.32559/et.2021.1.5.
The issue of inequalities has become increasingly important in recent decades. Although distributional effects, such as inequalities, are commonly associated with globalisation and fiscal policy processes, many of the side effects of the exceptionally loose monetary policy of the last decade also affect the issue. After identifying the mechanisms and channels linking the field of monetary policy and inequality, the research focuses on empirical analyses. The research is based on a panel ARDL test focusing on the 19 Euro area countries and Denmark, Sweden and Switzerland, where negative nominal interest rates have been applied. The research includes the period of 2008–2018. The aim of the paper is to assess how certain monetary policy indicators affect inequality. The main conclusion is consistent with the existing literature: the effect of monetary policy to inequalities is modest, however not negligible. The effect of inflation seems to be weak; however, the rise in unemployment rate and long term interest rates negatively affect inequalities. The positive effects of the rising GDP per capita are also proven by the analysis.
Nicolay, Rodolfo Tomás da Fonseca, Claudio Oliveira de Moraes, and Bruno Pires Tiberto. "The Effect of Central Bank Communication on the Capital Buffer of Banks: Evidence from an Emerging Economy." Econometric Research in Finance 3, no. 1 (September 3, 2018): 1–26. http://dx.doi.org/10.33119/erfin.2018.3.1.1.
The global financial crisis has revealed that the coordination between monetary policy and financial stability should be part of economic policy. This study examines the effects of monetary policy on the capital buffer (financial stability proxy) in the Brazilian economy and, in particular, how communication about both monetary policy and normative macroprudential policy affect the capital buffer maintained by banks. The study presents three main results: i) banks react strongly to monetary policy changes by increasing (reducing) the capital buffer in response to an increase (decrease) in the interest rate; ii) banks increase (decrease) the capital buffer when the central bank monetary policy communication signals an increase (decrease) in interest rates; and iii) banks use the capital buffer to accommodate the new measures of regulatory capital: the announcement of restrictive (liberalizing) capital measures reduces (increases) the capital buffer.
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