Effects Of Monetary Policy Measures Research Articles

The Russian economy: Inflationary development factors

Subject. This article examines the trends and factors in the development of inflationary processes in Russia from 1990 to the present. Objectives. The article aims to substantiate the factors identified on the basis of the criterion of effectiveness of monetary policy measures of the Bank of Russia in the medium term and influencing inflationary processes in different periods of development of the Russian economy. Methods. For the study, we used statistical and comparative analyses, and the graphical method. Results. The article finds that a fairly large number of both internal and external factors influence the dynamics of inflationary processes in Russia, in particular, non-monetary factors. Conclusions. The study of factors in the development of inflationary processes based on the criterion of the effectiveness of the Bank of Russia's monetary policy measures in the medium term is of particular importance for the Russian economy, as it contributes to determining the principal areas for inflation declining. Understanding the nature of inflation and determining the factors of its growth can help solve current problems in this area through a more deliberate approach.

Глобальные тенденции монетарной политики в период пандемии COVID-19 и в посткоронавирусной перспективе

The object of the study is the monetary policy of states at the end of the second — beginning of the third decade of the XXI century. The subject of the study is the tools of monetary policy, changing under the influence of external factors. The purpose of the work is to establish the degree of effectiveness of monetary policy measures of developed countries due to the fact that many of them were taken during the crisis of 2008-2009. However, at present, force majeure factors have imposed on the general turbulence of modern world politics, which required the development and implementation of new monetary mechanisms. The main attention in the article is paid to the United States as a country that actually determines the direction of further development of the world economy, despite forecasts of the imminent loss of the leading role of both the state itself and its currency. Based on the results of the analysis, conclusions are drawn about the inflationary impact of monetary measures taken in covid times to support national economies and financial institutions and it is proposed to intensify fiscal policy to counter inflation in combination with the adoption of monetary measures, since globalization has led to the intertwining of the mutual influence of the financial and real sectors of the economies of both states individually and the world economy as a whole. Conclusions are drawn that if earlier inflation was considered as a negative phenomenon, restraining primarily consumption and investment in production due to a decrease in the number of purchased goods and services, now scientists are increasingly inclined to the need to accelerate inflation as an incentive for accumulation.

Can Food Inflation Be Stabilized By Monetary Policy? A Quantile Regression Approach

Theoretically, a consistent and well-defined monetary policy can stabilize food inflation. However, empirical findings have reported both positive and negative effects of monetary policy measures on food inflation. In the literature, several analytical techniques are used to grasp the impact of monetary policy tools on food inflation in developed and developing nations. Usually, VAR and ARDL approaches are employed to fulfill this task. However, these techniques do not capture the tail dynamics of food inflation. In countries like Pakistan, where food expenditures are a major chunk of the consumption basket and half of the population is either poor or on the verge of poverty, tackling food inflation has always been a major task for policymakers. To capture the effect of monetary policy on various quantiles of food inflation, we have employed the quantile regression approach in this study. We have used the time series data based on monthly observations from September 2005 to October 2020 of food inflation, monetary policy, and several other variables. We have found that monetary policy and transportation prices remain highly significant across all quantiles, exhibiting a positive impact on food inflation. Thus restrictive monetary policy leads to higher flood inflation in the country. In the case of Pakistan, governments usually provide subsidies to lower the impact of food inflation. It is suggested that a restrictive monetary policy is usually not required when a subsidies-focused fiscal policy is implemented.

Nonlinear interest rate-setting behaviour of German commercial banks

Abstract We quantitatively analyse the interest rate-setting behaviour of German commercial banks during the period 2003–2014, using nonlinear (smooth transition) cointegration approaches. Our empirical results reveal principles applied by commercial banks in (re-)gaining margins in the aftermath of the financial crisis. We substantiate our findings using economic arguments from a bank management perspective. As our study contributes to a better understanding of the pass-through mechanism from market to commercial banks’ customer interest rates, the results will also be relevant to meaningful assessments of the effectiveness of monetary policy measures.

The Effects of the Eurosystem's App on Euro Area Bank Lending: Letting Different Data Speak

We study the implications of the Eurosystem's expanded Asset Purchase Programme (APP) for the bank lending business of euro area banks with euro area non-financial corporations (NFCs) using microeconometric matching techniques. Based on confidential bank-level data on quantitative balance sheet items and interest rates as well as on qualitative survey responses to the Eurosystem's Bank Lending Survey, we identify the exposure of banks to the APP and corresponding effects on loan growth. We find that the APP was effective in stimulating the lending activity with NFCs for a subset of relatively sound banks. At the same time, our results show that there is a non-negligible number of banks with less healthy balance sheets which could not transfer the APP stimulus into more lending. Instead, such banks appear to have used the APP stimulus for consolidating their balance sheets, thereby also reducing their lending business with NFCs. This confirms the importance of accounting for the large degree of heterogeneity in the euro area banking sector in analyses of the effectiveness of monetary policy measures.

The sources of house price change: identifying liquidity shocks to the housing market

PurposeThe purpose of this paper is to examine the role of monetary liquidity in house price evolution through examining the Asset (housing) Inflation channel. It identifies the main channels of transmission affecting house prices from monetary supply channels to house price change, examining how the Asset Price channel transmits changes in M1 to housing prices in Spain and the UK.Design/methodology/approachThe paper uses Vector Auto Regression (VAR) and Error Correction models to test the Asset Inflation channel in the UK and Spain from 1991 to 2013 in two steps. In the first step, the supply elasticity is estimated through the long-term relationship between house prices and stock supply. The second step estimates a Vector Error Correction (VEC) to explain house price dynamics conditioned on supply reactions. The latter is defined as a long-term inverse demand model where housing prices are controlled by fundamentals in each market. Models allow forecast testing using Choleski impulse responses methodology.FindingsSeveral results are found. In the supply model, both countries show rapid convergence to equilibrium with a larger elasticity of supply in Spain than in the UK but with a short run effect of new supply on prices in the UK. Regarding the Asset Inflation Channel model, the paper finds evidence of the existence of a housing accelerator effect in Spain, but not in the UK where changes in liquidity fully impact house prices in one direction.Research limitations/implicationsImplications of findings are mainly to forecast the effects of Monetary Policy measures in different economies.Practical implicationsThe model supports the evaluation of different impacts of monetary policy in territories. It shows that the same policy will have different impacts in different housing markets and therefore highlights the importance of examining each market separately to identify the appropriate policy interventions.Originality/valueThis is the first paper that estimates the impact of the Asset Inflation Channel on house prices that endogenises housing market conditions and compares effects and interrelationships in two different economies.

Speculation and monetary policy behaviour in the 1992 currency crisis: the Italian case

The paper proposes an explanation for the 1992 currency crisis as the result of monetary policy behaviour and private agents’ speculation. Our analysis reveals how speculators’ expectations and the behaviour of the monetary policy authority were formed on the widespread beliefs about the future value of income. We show that the real effects of monetary policy measures represent the link between the action of the central bank and speculation.