Injection Of Money Research Articles

How is the ECB’s quantitative easing transmitted to the financial markets?

PurposeOver the last few years, the European Central Bank (ECB) has adopted unconventional monetary policies. These measures aim to boost economic growth and increase inflation through the bond market. The purpose of this paper is to study the impact of the ECB’s quantitative easing (QE) on the investor’s behavior in the stock market.Design/methodology/approachFirst, the authors theoretically identify the transmission channels of the QE shocks to the stock market. Then, the authors empirically assess the financial market’s responses to QE shocks in a data-rich environment using a factor augmented VAR (FAVAR).FindingsThe results show that the ECB’s unconventional monetary policy positively affects the stock market. A QE shock leads to an increase in stock prices and a drop in the realized volatility and the implied risk premium. The authors also suggest that the ECB’s QE is transmitted to the stock market through five main channels: the liquidity, the expectation, the portfolio reallocation, the interest rates and the risk premium channels.Practical implicationsThe findings help to better understand the behavior of stock market assets in a data-rich economic context and guide investors and policymakers in the presence of unconventional monetary tools. For instance, decision-makers and investors should consider the short-term effect of the QE interventions and the changing behavior of the financial actors over time. In addition, high stock market returns can increase risk appetite. This can lead investors to underestimate the market risk. Decision-makers and market participants should take into consideration the impact of the large injection of money through the QE, which may raise the risk of a speculative bubble in the financial market.Originality/valueTo the best of the authors’ knowledge, this is the first study that incorporates a theoretical and empirical analysis to explore QE transmission to the stock market in the European context. Unlike previous studies, the authors use the shadow rate proposed by Wu and Xia (2017) to quantify the effect of the ECB’s QE in a data-rich environment. The authors also include two key risk indicators – the stock market risk premium and the realized volatility – to capture investors’ behavior in the stock market following QE shocks.

Determinants of Short- and Long-Term Commercial Lending Rates in Peru, 2010–2022

Short- and long-term interest rates are crucial for investment and, thus, business dynamism. The injection of money depends on the ability to promote cash flows through credit which boosts productive sectors. In the last decade, among Latin American countries, Peru has stood out for its key financial system and macroeconomic stability characteristics. The Central Reserve Bank of Peru (BCRP) plays a key role in setting the reference rate given its autonomy and strong institutional trust. However, the mixed pension system injects liquidity into the financial system through its private contributions. For the purposes of this study, an autoregressive econometric model of distributed lags (ARDL) was employed. The findings reveal that the reference rate set by the BCRP establishes a long-term relationship for both short and long-term rates, empirically demonstrating the effectiveness of monetary policy. Additionally, the liquidity provided by the pension system triggers an immediate shock response in determining the short-term rate. It is also observed that the issuance of sovereign bonds is a robust tool in determining the long-term rate due to its facilitation of credit access. This research is relevant for identifying macroeconomic and financial variables and guiding the formulation of macroeconomic policies.

Could Fixed Asset Revaluation Encourage Investment? Study Case in Indonesia

After the COVID-19 Global Pandemic, most firms in Indonesia required a significant enough money injection to improve their value and encourage investors to make investments. The research seeks to assess which determinants are most relevant and significant in promoting the value of the company. This study examined 288 samples with three independent variables: liquidity via the quick ratio indicator (QR), ownership structure via the majority ownership indicator, and corporate size via the total asset natural logarithm indicator. Structural Equation modelling is utilized during the analysis stage to determine the strength of the association between independent and dependent variables. The results revealed that liquidity and the size of the firm have an impact on the increase in the company’s value through asset revaluation; however, ownership structure has no impact. The research suggests that companies listed at the EIB should pay special attention to the variables of investment opportunity and size if they want to increase their investments in the future.

SERBIAN AGRARIAN POLICY IN THE VORTEX OF HIGH INFLATION AND GEOPOLITICAL RISKS

Attempts to solve economic crisis by a massive injection of money into the financial system have caused inflation in most highly developed countries. World economy is burdened by a high inflation, excessed demand, over indebtedness, in one word unready for the challenges that followed on the geopolitical level, and have spilled over into the economy. This situation has also affected agriculture, while the rise in food prices was particularly sensitive because it has affected the population life standard. All existing weaknesses of the economic and agrarian policy of Serbia and absence of a serious long-term strategy in this seriously in crisis sector’s development have surfaced. This paper analyses a situation in the Serbian agricultural sector, which has been pressured at the same time by bad agrarian policy, numerous internal weaknesses and big geopolitical risks.

The soft budget constraint in action: German third tier professional football during the COVID19 pandemic

ABSTRACT Rationale The paper examines whether the concept of the soft budget constraint (SBC) helps understanding how lower tier football coped with the revenue drop during the COVID19. Design A qualitative research design relying on expert interviews and document analyses was employed. A sample of five clubs was examined using process-tracing methods. Findings Overspending and debt-making are persistent features of German lower tier football. Before the pandemic, clubs benefitted from distinct bail-outs. The revenue drop during the pandemic was primarily compensated by public subsidies; clubs also got money injections from fans, sponsors and investors. Yet, shareholder structure matters for the likelihood that clubs faced hard budget constraints. Practical implications The system of promotion and relegation facilitates overspending and debt-making. The specific corporate of German football clubs encourages moral hazard and creates hold-up risks. The public seems to have become more hesitant to grant bail-outs. Research contribution The concept of the soft budget constraint is instructive for understanding the specific economics of European football but its limits have to clearer specified.

Implications for tourism management of including uncertainty in the estimation of the economic impact of sports events

PurposeStudies that measure the economic impact of events usually disclose deterministic results. This situation implies a methodological problem that compromises the veracity of the estimates. This aspect is particularly relevant in the field of sports tourism. For these reasons, this study aims to empirically analyse the estimate of the initial injection of money from sporting events considering uncertainty, and show its variability.Design/methodology/approachUsing surveys from five sporting events, a database with a total of 2,902 responses is analysed. With these cases as illustration to show the problem, the initial injection of money from the events is estimated. To include the uncertainty derived from the use of data gathered in the surveys, the confidence intervals are obtained using bootstrap.FindingsThe authors find remarkable differences between the current study’s results and deterministic results. In general, except for one of the events studied, the adverse possible scenario of being in the lower limit is higher than the more positive possible scenario. Moreover, in some cases, the lower limit is around one-third of the average or higher. It can imply an important cut in the expected impact. The results obtained allow us to show the differences between deterministic studies and those which include uncertainty.Originality/valueThe work presents prominent implications. Empirically, the inclusion of uncertainty in economic impact studies provides greater reliability to the results, defeating the idea of deterministic estimates. Managerially, working only with deterministic results limits the decision-making capacity of managers, and speculation increases in impact studies.

Recent Monetary History: A Monetarist Perspective

The U.S. Federal Reserve System has recently added very large additional supplies of its own money, in the form of deposits (cash reserves) held by member banks with the Fed. The first injection of central bank money offered in exchange for Treasury Bonds and MBS (QE) was intended to overcome the Global Financial Crisis (GFC) of 2008‐09. The second infusion of extra cash was intended to relieve the impact on the economy of the COVID lockdowns of 2020.The increase in the money base—defined as commercial bank deposits with the FED plus currency in issue—after 2008 did not lead to any acceleration in what had become a very low rate of inflation. Nor did it lead to any notable acceleration in the supply of money, broadly defined. But both the money supply and spending reactions to the additional central bank money after 2020 have been very different. And the growth in the money supply accelerated sharply and, along with it, inflation.The author explains these different outcomes in terms consistent with the monetarist and quantity theory traditions. A tradition that focuses on the importance of the demand for as well as the supply of money—including central bank money. The article shows that the demand for as well as the supply of cash reserves increased markedly after the GFC, reflecting the worldwide risk aversion and surfeit of capital. The exposed banks were reluctant to lend more and preferred to shore up their leveraged balance sheets holding extra cash which slowed down deposit growth. Banks in the wake of the COVID lockdowns have proved more willing to exchange cash for overdrafts, leading to rapid increases in the supply of deposits and money. Such increases have in turn led predictably to more spending as the extra money was exchanged for goods, services, and assets that caused prices to rise sharply.To reverse these inflation trends, the Fed will need to control the supply of money and bank lending. To do so effectively, the Fed should attempt to estimate the demand for large (excess) cash reserves of the banking system and set the interest rate it offers on these cash reserves accordingly. But this Fed is not monetarist; it takes little notice of money or bank credit supplies and will continue to rely on its interest rate tool to limit demand. Nevertheless, monetarists and the market will be watching closely how well the Fed manages a transition not only to higher interest rates, but back to non‐inflationary increases in the supply of money.

Direct Economic Inputs from Internationally Funded Science Projects to the Abaco Islands, The Bahamas

International expenditures for scientific research are important for small island developing nations, especially for those local communities that directly support research activities. We used the Abaco Islands, The Bahamas, as a case study to quantify the direct monetary inputs to a local economy via internationally funded scientific research. We found that over two years the external monetary influx was $995,310, via 24 research teams, spent across diverse business sectors on Abaco Island. A direct survey approach ensured this was a conservative estimate, leaving out numerous indirect economic impacts, thereby suggesting the actual monetary infusion was significantly higher. The highest expenditures were for services (e.g., local salaries and boat guides), lodging, food/drink, and major equipment (e.g., vehicles). While we do not have data from research teams working on other islands, significant research expenditures are made elsewhere in The Bahamas, including through government-sponsored efforts, environmentally-focused non-governmental organizations, and research centers. In addition to the research-based contributions that give rise to conservation and management decision-making, scientific activity brings benefits through the injection of money into local island economies. This relationship warrants study at larger regional scales, including across The Bahamas archipelago.

An Empirical Study on Usage of Business Jets and Financial Performance of Chinese Firms

This paper analyses sustainable financial performance of 242 Chinese companies, to see if the companies that utilize business aviation produce better results compared with non-users. This type of research has been done in North America and Europe but has not yet been done in China. The companies were analyzed using the economic performance metric Economic Value Added (EVA). This indicator was used to assess if the companies added or destroyed economic value through their operations. Primary data was gathered from published financial statements of all companies for the six-year period 2011-2016. This paper contributes to quantify the argument that the use of business jets helps companies to be more productive. The main finding of this study is that companies that utilize Business Jets added more collective value to EVA than non-users. In line with similar studies in the USA, Canada and Europe, it is concluded that companies that use business jets produce superior economic growth to non-users. The results were mixed as to whether the companies utilizing business jets experience better financial performance than non-users. The overall growth in EVA by business jet users was very significant. The 80 companies that made up this group grew their EVA by a collective average of 26.4%. When compared with some of the biggest companies on a world stage, business jet users performed outstandingly. The 81 Chinese companies from the Forbes Global 2000 destroyed-17.8% in economic value over the period studied. Any injection of government money into these companies does not seem to be helping them produce added value. However, the number of companies producing positive EVA for the ‘Business Jet User’ group fell from 68% in 2011 to 56% in 2016.

Comment on “The Welfare Implications of Massive Money Injection: The Japanese Experience from 2013 to 2020”

Comment on “The Welfare Implications of Massive Money Injection: The Japanese Experience from 2013 to 2020”

Comment on “The Welfare Implications of Massive Money Injection: The Japanese Experience from 2013 to 2020”

Comment on “The Welfare Implications of Massive Money Injection: The Japanese Experience from 2013 to 2020”

The Welfare Implications of Massive Money Injection: The Japanese Experience from 2013 to 2020

AbstractThe present paper derives a money demand function that explicitly takes the costs of storing money into account. This function is then used to examine the consequences of the large‐scale money injection conducted by the Bank of Japan since April 2013. The main findings are as follows. First, the opportunity cost of holding money calculated using 1‐year government bond yields has been negative since the fourth quarter of 2014 and most recently (2020:Q2) was −0.2%. Second, the marginal cost of storing money, which was 0.3% in the most recent quarter, exceeds the marginal utility of money, which was 0.1%. Third, the optimal quantity of money, measured by the ratio of M1 to nominal gross domestic product, is 1.2. In contrast, the actual money‐income ratio in the most recent quarter was 1.8. The welfare loss relative to the maximum welfare obtained under the optimal quantity of money in the most recent quarter was 0.2% of nominal gross domestic product. The findings imply that the Bank of Japan needs to reduce M1 by more than 30%, for example through measures that impose a penalty on holding money.

El derecho humano al agua en España en el contexto europeo (2010-2020). Implicaciones para las políticas y los modelos de gestión del ciclo urbano

El derecho humano al abastecimiento y al saneamiento (DHAS) constituye hoy en España y en Europa la bandera de un movimiento que se articula en torno al concepto del agua como bien común y que se orienta al objetivo de construir un modelo de gestión pública participativa y transparente. La materialización efectiva del DHAS se relaciona discursivamente con la titularidad pública o privada de los operadores de los servicios urbanos de agua, lo que ha contribuido a la reactivación de los debates sobre la necesidad de conservar o recuperar el carácter público de estos servicios, y sobre la necesidad de generar marcos jurídicos que garanticen políticas de democracia local efectiva. A esta dimensión sociopolítica, se añade otra característica: el movimiento del DHAS en España sintoniza en discurso y articulación organizativa con las perspectivas socio-eco-integradoras de la gestión del agua como recurso natural, de los ecosistemas acuáticos. Ésta es una cualidad importante y en cierta manera distintiva de la experiencia española, que contrasta con los desencuentros y conflictos que frecuentemente caracterizan a las perspectivas social y ambiental en los movimientos de defensa del agua, y en general de los recursos naturales. Complementariamente a lo anterior, este artículo presenta un nuevo enfoque de la tipología de pobrezas hídricas. La reciente recepción del DHAS en los países europeos se ha focalizado especialmente en la asequibilidad (prohibición de cortes, garantía del mínimo vital, tarifas sociales) y en las implicaciones para la gobernanza (transparencia, rendición de cuentas) y el modelo de gestión (publico versus privado). No obstante, a lo largo de la investigación que se presenta, se ha constatado que la accesibilidad sigue siendo un problema significativo en ciertas regiones europeas, relacionado especialmente con la existencia de asentamientos marginales, chabolismo, personas sin hogar o trabajadores temporeros inmigrantes en áreas rurales. Finalmente, este artículo aborda la cuestión de la regulación legal del derecho humano al agua en España, analizando las claves de este proceso y presentando las últimas propuestas del movimiento del DHAS en el que sus autores conceptualmente se sitúan. Desde un punto de vista teórico (ecología política urbana) y metodológico (investigación-acción participativa transdisciplinar), el artículo se ha desarrollado en el doble marco en el que los autores se desenvuelven. Por una parte, el grupo de trabajo de ciclo urbano del agua de la Fundación Nueva Cultura de Agua (https://fnca.eu/oppa/ciclo-urbano-del-agua); y, por otra, la Red de Excelencia de la Agencia Estatal de Investigación sobre pobreza hídrica (WAPONET, CSO2017-90702-REDT, https://waponet.org/approach/).

Policy Approaches to Artificial Intelligence Based Technologies in China, European Union and the United States

This paper provides a summary survey of the policy approaches to artificial intelligence-based technologies in China, the European Union, and the United States. China has the most aggressive approach, launching major initiatives since 2015 such as ‘Made in China 2025’, the Internet Plus Plan, the New Generation Artificial Intelligence Development Plan, and the Artificial Intelligence Standardization White Paper. In 2018, the EU finalized both the European AI Strategy and ‘Made in Europe’ or the Coordinated Plan on the Development and Use of Artificial Intelligence. Despite a traditional reticence to adopt national strategies and perhaps pushed by growing concerns about China, the US Government announced the American AI Initiative and a National AI R&D Strategic Plan in 2019. The AI approaches in these three economies reflect their relative strengths—state control in China, citizen voice in Europe, and business practices in America. Unencumbered by privacy concerns, China’s strategy is geared to exploit the abundance of domestic data and to develop AI talent through central schemes and massive injections of money. The European Union’s regulations and spending priorities are guided by the objective of building citizen trust in AI-based technologies by safeguarding privacy and ameliorating disruptions in national labor markets. The mainstay of the US approach is to strengthen the linkages between business and AI-related research, and find ways to fund basic R&D. Despite efforts to indigenize AI innovations, all three economies face challenges. China’s AI strategy continues to rely disproportionately on just three tech giants: Baidu, Tencent and Alibaba, which have investments in more than a 100 AI-involved companies. Europe’s AI resources are unbalanced geographically—a quarter of Europe’s AI talent is in the UK and another quarter in Germany and France—and Brexit poses a serious risk. More than half of the AI talent in the US is foreign born, so immigration policies will inevitably be a central component of a national AI strategy.

Fiat Money as a Public Signal, Medium of Exchange, and Punishment

AbstractThis paper studies different welfare-enhancing roles that fiat money can have. To do so, we consider an indivisible monetary framework where agents are randomly and bilaterally matched, while the government has weak enforcement powers. Within this environment, we analyze state contingent monetary policies and characterize the resulting equilibria under different government record-keeping technologies. We show that a threat of injecting fiat money, conditional on private actions, can improve allocations and achieve efficiency. This type of state contingent policy is effective even when the government cannot observe any private trades and agents can only communicate with the government through cheap talk. In all these equilibria fiat money and self-enforcing credit are complements in the off equilibrium. Finally, this type of equilibria can also emerge even when the injection of fiat money is not a public signal.

An heterogeneous-agent New-Monetarist model with an application to unemployment

A New-Monetarist model is constructed with expenditure and unemployment risks that generates equilibria with non-degenerate distribution of money holdings. Distributional effects can overturn key insights of the model with degenerate distributions, e.g., the value of money depends on the income distribution; a one-time money injection raises aggregate real balances in the short run – price adjustments look sluggish; anticipated inflation can raise output and welfare; there can be a long-run trade-off between inflation and unemployment. Distributional effects also generate a quantitatively significant aggregate demand channel through which transfers financed with money creation can raise employment, and productivity shocks are amplified.

Sport-event portfolios: An analysis of their ability to attract revenue from tourism

Some cities strategically plan multiple small and medium-size sport events on different dates in their annual calendar of activities and avoid focusing on a single event of great magnitude. This is how the concept of a sport-event portfolio arises. This article aims to present a method to quantify the injection of sports-tourism money into a city from a portfolio of events. This methodology is applied to the portfolio of a small town with a policy oriented toward the promotion of tourism through the organization of sport events. The income generated by sports tourists in the 2017–2018 biennium is estimated using 1123 surveys conducted from four events included in the town’s portfolio. The research findings of this article are pioneers in the quantitative field of the study of event portfolios. This provides new opportunities for planning a strategy to attract tourism revenues.

Low cost airlines and international tourism demand. The case of Porto's airport in the northwest of the Iberian Peninsula

It is widely argued that low-cost carriers (LCCs) lead to an increase in tourism demand. However, there is no conclusive evidence when the airport is located in a region with large diaspora and outbound tourism. To gain insight into the relationship between LCCs and international tourism demand, we analyse whether a causal relationship exists between the number of international LCC passengers at the Porto airport and international tourism demand in the Galicia-North Portugal Euroregion using a vector autoregressive model. We evaluate the dynamics of the impacts of the LCC international passengers on international inbound tourism demand in a tourism demand model framework. The main findings are that the number of LCC international passengers has a positive influence on the number of nights spent by international guests in hotels and similar establishments and that the calculated monthly average injection of money into the economy is between 3 and 4.1 million € for North Portugal and between 1.4 and 2 million € for Galicia (Spain).

Long-underfunded Lyme disease research gets an injection of money—and ideas

Long-underfunded Lyme disease research gets an injection of money—and ideas

A economia monetária de Cantillon e o debate moderno entre ortodoxia e heterodoxia

Resumo O artigo retoma a contribuição de Richard Cantillon à ciência econômica no século XVIII. Apesar de distante no tempo, o arcabouço analítico do autor proporciona reflexões importantes acerca dos fenômenos monetários contemporâneos. Um dos elementos mais significativos é a consideração do ponto de injeção da moeda na economia, permitindo uma compreensão minimamente adequada da relação entre os chamados lados monetário e real da economia. Cantillon já fazia, portanto, uma crítica ao postulado quantitativista, o qual estabelecia uma relação de proporcionalidade entre moeda e preços. Como consequência de sua análise, fica claro que o aumento da quantidade de moeda gera efeitos reais duradouros na economia.