Climate shocks and economic resilience: a DSGE analysis of Morocco’s monetary policy adjustments

In the context of highly integrated global economies, the Federal Reserve (Fed), as the central bank of the United States, exerts widespread and profound influence through its monetary policy adjustments. This paper systematically analyzes the mechanisms and extent of the Fed's monetary policy adjustments on China's macroeconomy. First, this paper explored the main tools and recent adjustment paths of the Fed's monetary policy, including interest rate policies, quantitative easing (QE), and balance sheet reduction. Second, this paper analyzed how these policy adjustments are transmitted to the Chinese economy via international capital flows, exchange rate fluctuations, and changes in trade conditions. The study finds that Fed rate hikes can lead to a stronger U.S. dollar, prompting capital to flow back to the United States and exerting depreciation pressure on the Chinese yuan. This, in turn, affects China's export competitiveness and inflation levels. Additionally, increased volatility in global financial markets may pose challenges to China's financial stability. Finally, this paper propose policy recommendations for China to effectively respond to the Fed's monetary policy adjustments, including strengthening macro-prudential management, improving the exchange rate mechanism, and deepening financial market reforms.

The Ethiopian economy relies heavily on rainfed agriculture for income generation, export earnings, and rural livelihoods. However, projections from climate scenarios predict high frequency and intense extreme agro-climatic events, posing significant and growing risks to Ethiopia’s agri-food system and overall economy. This study evaluates the economic impacts of recurrent climate shocks on Ethiopia through 2040 and assesses the contribution of alternative investment options in lessening some of these impacts. Findings reveal that recurrent climate shocks could reduce Ethiopia's cumulative GDP by up to 17 percent (or approximately US$ 534.3 billion) by 2040 compared to a “no climate change” baseline. These economic losses are predominantly concentrated in the agricultural sector, disproportionately affecting rural households and poorer urban populations. Strategic investments in irrigation infrastructure and hydroelectricity generation emerge as effective measures to mitigate some of the adverse effects of recurrent climate variability, underscoring the importance of proactive and targeted climate adaptation strategies for Ethiopia's economic resilience. Results further indicate that significantly mitigating the socio-economic impacts of climate and weather shocks requires scaling up investments and diversifying adaptation strategies. The insights derived from this analysis can be informative to economies with similar structures.

PurposeThe study aims to determine the long and short-term causal relationships between the variables associated with the adjustment of monetary policy and the stock market in India in the presence of structural breaks.Design/methodology/approachThe study employed the autoregressive distributed lag (ARDL) bounds test and the Error Correction Model to assess long- and short-term causal relationships. The study also used non-frequentist Bayesian inferences for the validity of estimation robustness. The Bai–Perron test is used to identify breakpoint dates for the Indian stock market index, and the Granger Causality test is employed to ascertain the direction of causality.FindingsThe F-bounds test reveals cointegration among the variables throughout the examined period. Specifically, the weighted average call money rate (WACR), inflation (WPI), currency exchange rate (EXE), and broad money supply (M3) exhibit statistical significance with precise signs. Furthermore, the study identifies the negative impact of the COVID-19 outbreak in March 2020 on the Indian stock market.Research limitations/implicationsAlthough the study provides significant insights, it is not exempt from constraints. A significant limitation is selecting a relatively limited time period, specifically from April 2008 to September 2023. The limited time frame of this study may restrict the applicability of the results to more comprehensive economic settings, as dynamics between the monetary policy and the stock market can be influenced by multiple factors over varying time periods. Furthermore, the utilisation of the Weighted Average Call Money Rate (WACR) rather than policy rates such as the Repo rate presents an additional constraint as it may not comprehensively account for the impacts of particular policy initiatives, thereby disregarding essential complexities in the connection between monetary policy variables and financial markets.Practical implicationsThe findings of the study suggest that investors and portfolio managers should consider economic issues while developing long-term investing plans. Reserve Bank of India should exercise prudence to prevent any discretionary measures that may lead to a rise in interest rates since this adversely affects the stock market. To mitigate risk, investors should closely monitor the adjustment of monetary policy variables.Social implicationsThe study has important social implications, especially regarding the lower levels of financial literacy among investors in India. Considering the complex nature of the study’s emphasis on monetary policy adjustments and their impact on the stock market. Investors face the risk of significant losses due to unexpected adjustments in monetary policy. Many individuals may need help understanding how policy changes impact their investments. Therefore, RBI must consider both price and financial stability when formulating monetary policies. Furthermore, market participants should consider the potential impact of fluctuating monetary policy variables when devising their long-term investment strategies. Given that adjustments in interest rates can markedly affect stock market dynamics, investors must carefully assess the implications of monetary policy decisions on their portfolios.Originality/valueThe study uses dummy variables in the ARDL model to represent structural breaks that emerged from the COVID-19 pandemic (as determined by the Bai–Perron multiple breakpoint test). The study also used the Perron unit root test to find out the stationary of the series in the presence of structural breaks. Additionally, the study also employed Bayesian inferences to affirm the robustness of the estimates.

This paper explores the intricate relationship between economic policy and social stability, focusing on the impact of monetary policy tools on social insecurity in Nigeria from 1990 to 2022. By examining data from the Central Bank of Nigeria Statistical Bulletin and the World Bank Development Indicators, this study investigates how key monetary tools-Monetary Policy Rate, Broad Money Supply, Cash Reserve Ratio, and Treasury Bill Rate affect unemployment, used as a proxy for social insecurity. Using the Augmented Dickey-Fuller Unit Root and Auto-Regressive Distributed Lag (ARDL) techniques, the study confirms that these monetary tools and social insecurity lack long-term co-integration, meaning they do not move in sync over time. However, short-term insights reveal that the Cash Reserve Ratio and Treasury Bill Rate significantly reduce unemployment, while the Monetary Policy Rate increases it. The Broad Money Supply, though negatively associated with unemployment, shows no significant impact. The findings underscore that targeted adjustments in monetary policy can exacerbate social stability. It is recommended that the Central Bank of Nigeria carefully consider changes to the monetary policy rate to boost economic activity while safeguarding price stability. This approach may help mitigate unemployment, thereby addressing a key factor in social insecurity.

This paper explores the intricate relationship between economic policy and social stability, focusing on the impact of monetary policy tools on social insecurity in Nigeria from 1990 to 2022. By examining data from the Central Bank of Nigeria Statistical Bulletin and the World Bank Development Indicators, this study investigates how key monetary tools-Monetary Policy Rate, Broad Money Supply, Cash Reserve Ratio, and Treasury Bill Rate affect unemployment, used as a proxy for social insecurity. Using the Augmented Dickey-Fuller Unit Root and Auto-Regressive Distributed Lag (ARDL) techniques, the study confirms that these monetary tools and social insecurity lack long-term co-integration, meaning they do not move in sync over time. However, short-term insights reveal that the Cash Reserve Ratio and Treasury Bill Rate significantly reduce unemployment, while the Monetary Policy Rate increases it. The Broad Money Supply, though negatively associated with unemployment, shows no significant impact. The findings underscore that targeted adjustments in monetary policy can exacerbate social stability. It is recommended that the Central Bank of Nigeria carefully consider changes to the monetary policy rate to boost economic activity while safeguarding price stability. This approach may help mitigate unemployment, thereby addressing a key factor in social insecurity.

In this paper, we examine the impacts of the changes in the monetary policy of US on trade, capital flow, and economy of emerging markets. We find that the impacts vary across the emerging markets in three different regions: Central-East Europe, Latin America, and East Asia. Based on an empirical i

This study investigates the complex relationship between oil price fluctuations and economic growth in Algeria, using time series data from 1973 to 2023. Advanced econometric techniques, including Vector Autoregression (VAR), Impulse Response Functions (IRFs), Variance Decomposition (VD), and the Toda-Yamamoto causality test, were employed to examine both the direct and indirect effects of oil price changes on the country’s growth. The results of the VAR model indicate a strong positive relationship between oil prices and economic growth, emphasizing the critical role of hydrocarbon exports in driving Algeria’s economy. However, this connection is influenced by other macroeconomic factors, such as inflation, exchange rates, and money supply. IRF analysis shows that while oil price increases initially stimulate growth, long-term impacts are moderated by adjustments in monetary policy and exchange rates. The variance decomposition analysis further highlights that oil price volatility significantly influences short-term economic performance, but its effect diminishes over time, suggesting progress in economic diversification, policy adaptation, and the effectiveness of managing oil-related volatility. The Toda-Yamamoto causality test provides additional insights, confirming unidirectional causality from oil prices to growth and highlighting indirect effects through exchange rates and money supply. These findings underscore the importance of continued diversification efforts in oil-dependent economies like Algeria, as well as the need for adaptive monetary and exchange rate policies to ensure both short-term stability and long-term growth. This study contributes to the broader literature on oil price-growth dynamics and offers valuable guidance for policymakers in resource-rich countries.

The article examines the application of monetary policy instruments in Ukraine under martial law imposed due to Russian aggression. It focuses on the transformation of the National Bank of Ukraine's (NBU) monetary tools and their role in stabilizing the economy amidst unprecedented challenges. The study provides a comprehensive analysis of key instruments such as the key policy rate, open market operations, foreign exchange interventions, and measures to support the banking system. These tools are evaluated in the context of their effectiveness in mitigating economic disruptions caused by the war and ensuring financial stability. Particular attention is paid to the impact of martial law on the country's financial system. The imposition of martial law has necessitated adjustments in monetary policy aimed at curbing inflationary pressures, addressing liquidity shortages in the banking sector, and maintaining public confidence in the national currency. Structural changes in monetary policy implementation are explored, highlighting the adaptation of existing frameworks to meet the demands of a crisis economy. The analysis identifies specific challenges posed by the wartime economy, including heightened macroeconomic instability, increased risks of capital outflows, and the constraints on monetary circulation. Furthermore, the study highlights the tension between the need for economic stimulus and the risk of exacerbating inflation. The NBU's approach to balancing these competing priorities is discussed, offering insights into the decision-making processes underpinning policy adjustments. The study also addresses the broader implications of martial law on monetary regulation, including changes in currency control mechanisms, restrictions on foreign exchange operations, and the introduction of emergency financial measures. The effectiveness of these interventions is assessed against key performance indicators, such as inflation rates, exchange rate stability, and the resilience of the banking system. Drawing on the experience of other countries that have faced similar crises, the article proposes practical recommendations for enhancing the resilience of monetary policy in Ukraine. These recommendations include diversifying monetary tools, increasing international financial cooperation, and leveraging digital technologies to improve financial oversight. The study emphasizes the importance of transparency and public communication in maintaining trust in monetary policy during times of crisis. This research contributes to the understanding of how monetary policy can be adapted to the unique challenges of a wartime economy. By examining the case of Ukraine, it provides valuable insights for policymakers and central banks worldwide facing similar geopolitical and economic disruptions. The findings underscore the critical role of proactive and flexible monetary policy in fostering economic stability and supporting sustainable development under adverse conditions.

In the past twenty years, the study of monetary policy and estate has become an essential component of the field of macroeconomics. The chief object of this paper examines that the loose monetary policy is not the main factor leading to the housing bubbles. With the internet bubbles bursting in the early 2000s, there was a destabilizing effect on the stock market and an increase in interest rates, causing the prices of housing to become higher. Some economists present that monetary policy plays a central role in housing bubbles but the findings in this paper would provide controversial views by analyzing the relationship between real macroeconomics in the 2000s in the U.S. and the monetary policy rule, such as Taylor Rule, Phillips Curve, Fisher Equation and the trend of aggregate demand. The change in the nominal interest rate would be higher than that in the inflation rate and real interest rate. The adjustment of monetary policy according to macroeconomics, including the unemployment rate and the extent of deflation. As a result, loose monetary policy is not the main reason for the housing bubbles.

This work provides an answer to the question: what should be the appropriate monetary policy under different inflationary conditions (that is, demand-pull and cost-push inflations) and what should be the effect of this nondistinction in the direction of monetary policy? Since no modern economy is autarky, the Nigerian economy is considered and examined analytically. Therefore, a conclusion that the problem of macroeconomic instability faced-with in countries like Nigeria, is as a result of the applications of inappropriate adjustments in monetary policy under different inflationary conditions is drawn. Thus, a recommendation that expansionary monetary policy be adopted for such countries is prescribed, but to an extent where a unit increase in cost must correspond with a unit increase in broad money supply. Likewise, such economies like Nigeria are encouraged to increase their exports and reduce imports in order to redress the problems of cost-push (imported) inflation.

The economics of uncertainty and information: Jean-Jacques Laffont. Translated by John P. Bonin and Helene Bonin. Cambridge, MA: The MIT Press, 1989. 289 pp. $27.50 ISBN 0-26212136-0

Urgency of the research. It is important to determine the impact of political cycles on budgetary policy in order to improve budget funding of Ukraine, accelerate reforms and stimulate economic development. Target setting. The assessment of Ukraine’s budgetary policy dependence on political cycles is important in terms of regulating the budget performance security and financial stability of the state. Actual scientific researches and issues analysis. Political cycles are the subject of research for a number of scientists among them I. Bardin, V. S. Boyko, D. Buchanan, А. Vdovychenko, R. Wagner, N. Dehtyarova, N. M. Lypko, Y. Mironovich, V. Nordhaus, V. Shevchuk. Definition of uninvestigated parts of general matters. Identification of interconnections and interinfluences of political cycles and Ukraine’s budget policy as well as effects of such relations remain insufficient. The research objective. The aim of the article is to determine the dependence of Ukraine’s budgetary policy on political cycles. The statement of basic materials. The article reveals the presence of the influence of political cycles in Ukraine on budget policy. The deterioration of the Ukraine's budget deficit and state debt indicators is analyzed. Based on econometric models the author proves an artificial increase in expenditures. It was found that the growth of social protection costs is a major factor of political cycles influence on the economy. The author also relates Inflationary processes before and after the elections to adjustments in monetary policy, which in turn requires coordination of fiscal and monetary policies. The author characterizes the challenges for the budget policy of Ukraine. Conclusions. The main challenge to the fiscal policy now is to settle indicators Ukraine's budget security com-bined with the financial support of the reforms in the economic and political life, despite the military conflict, shadow economy, the political crisis.

Online lending is a product of digital transformation, which has had a profound impact on the traditional money market. This paper discusses the impact of peer-to-peer (P2P) online lending on the effectiveness of monetary policy. Through the bootstrap sub-sample rolling-window Granger causality tests show that P2P has both positive and negative impacts on the money supply (M2). The positive impact of P2P on M2 indicates that online loans increase the amount of money supply. The negative impact of P2P on M2 shows that it may cut the money supply, thus weakening the monetary policy effectiveness. The general equilibrium model is inconsistent with these results, which underlines a positive effect from P2P to M2. In turn, the negative impact points out that the adjustment of monetary policy will hinder the development of P2P. The negative impact of M2 on P2P indicates that through the regulation of money supply, the online lending market can be correctly guided to prevent financial market from getting out of control. Through the supervision of online lending industry, we can accurately grasp the development of the internet financial industry and reduce its impact on monetary policy.

Gold has long been regarded as a traditional safe haven asset, especially during economic uncertainty and geopolitical unrest. This study examines the complex interplay between traditional supply-demand dynamics, macroeconomic conditions, monetary policies, and market sentiment. Factors such as limited gold mine production and rising production costs, while central banks have increasingly turned to gold as a reserve asset, has driven prices upward even further. Additionally, geopolitical risks, inflation expectations, and Fluctuations in the US dollar, often inversely correlated with gold prices, have added to market volatility. The widespread use of financial instruments like gold ETFs and futures has also contributed to price fluctuations. As the global economy recovers, adjustments in monetary policy and ongoing geopolitical tensions will play a critical role in shaping the future direction of gold prices. This analysis offers valuable insights for investors and policymakers while suggesting future research scope to further understand the gold market's complexities.

Money growth and inflation in China: New evidence from a wavelet analysis