Monetary Dynamics Research Articles

Modern Monetary Dynamics: Bids of Money Without Banks, Money Supply Theory, Money Multiplier, and Policy Implications

This research explores modern monetary dynamics with a focus on money supply without bank intermediation, money supply theory, the money multiplier mechanism, and the policy implications arising from this phenomenon. In the contemporary financial context, the emergence of financial technology (fintech) and cryptocurrencies has changed the traditional landscape of money supply, allowing money supply to occur without the direct role of banks. This article discusses the basic concepts of money supply theory, including the factors that affect the money supply in the economy. Furthermore, this study analyzes the money multiplier mechanism, which describes how money injected into the banking system can result in a larger increase in the money supply. Using both theoretical and empirical approaches, this study assesses the monetary policy implications arising from changes in the way money supply occurs, including the challenges for monetary authorities in controlling inflation and financial stability. The results show that this transformation in money supply requires innovative and responsive policy adaptations to maintain the effectiveness of monetary policy in maintaining economic stability.

Understanding the Dynamic Linkages: Inflation, Real Balances, and Their Impact on Economic Growth in ECOWAS

This study examines the dynamic relationship between growth, inflation, and real money balances in the Economic Community of West African States (ECOWAS). We apply a new approach by extending comprehensive econometric methods so that monetary dynamics can be better understood in the West African sub-region. The study obtained data from the World Bank from 2006 to 2021 and covered 15 countries. For robustness checks, we estimate dynamic ordinary least squares and fully modified ordinary least squares. These findings reveal the existence of a significant cointegration relationship between growth, real balance, and inflation. Furthermore, this study found that real balance has a positive long-run dynamic impact on growth. Likewise, there is a short-run positive impact of money and inflation on growth. We contribute to the literature on the money-growth nexus by focusing on West Africa, which faces macroeconomic vulnerabilities due to structural imbalances. These findings have policy implications for central banks and the Fiscal Agency. Central Banks must collaborate to reduce money in the informal sector, while Fiscal Authorities must control inflation collectively.

The credit card-augmented Divisia monetary aggregates: an analysis based on recurrence plots and visual boundary recurrence plots

In this paper, we compare the dynamics of the growth rates of the original Divisia monetary aggregates, the credit card-augmented Divisia monetary aggregates, and the credit card-augmented Divisia inside monetary aggregates. This analysis is based on the methods of recurrence plots, recurrence quantification analysis, and visual boundary recurrence plots which are phase space methods designed to depict the underlying dynamics of the system under study. We identify the events that affected Divisia money growth and point out the differences among the different Divisia monetary aggregates based on the recurrence and visual boundary recurrence plots. We argue that the broad Divisia monetary aggregates could be used for monetary policy and business cycle analysis as they are exhibiting less fluctuation compared to the narrow Divisia monetary aggregates. They could positively affect policy decisions regarding environmental choices and sustainability. We also point out the changes in the monetary dynamics locating the 2008 global financial crisis and the Covid-19 pandemic.

Financial Management in Business Administration: Optimizing Resources for Profitable Outcomes

This examine provides a complete analysis of participant demographics, survey responses, and financial variables to offer a nuanced know-how of the research domain. The demographic breakdown in Table 1 exhibits a balanced gender distribution (60% lady) and a targeted age variety (imply age of 35.Four years), imparting a context for next analyses. Survey responses, as precise in Table 2, showcase excessive pride (imply rating of 4.Five) and willingness to endorse (imply rating of four.Eight), while versions within the belief of provider high-quality underscore numerous player viewpoints. The economic analysis in Table three delves into sales, expenses, and profit margin, highlighting a robust financial performance with mild variability. In conclusion, this holistic approach equips stakeholders with insights into participant characteristics, perceptions, and monetary dynamics. The findings serve as a foundation for knowledgeable choice-making, method development, and ongoing exploration inside the studied context. The examine not simplest captures the present image but additionally encourages continuous inquiry and refinement.

Legal regime of competition in Slovenia

The Slovenian competition law used to be recently been reformed. Slovenia is a small transition economic system characterized by robust monetary dynamics, whose competition regime in its cutting-edge form was set up in 1993. The Constitution of the Republic of Slovenia, the main legal rule in Slovenia, ensures in its Art. 74 free financial initiative. In the same time, they ought to take into consideration specific constraints, referring exceptionally to their status, as they are allowed to operate solely in one of the legally available varieties and in accordance with the public benefit. Individuals need to respect competition when appearing in the market. As an effect, unfair competition practices which prevent competition in a manner opposite to the regulation are prohibited.

Macroeconomic policy and profit rate of a company: A dynamic panel estimation and comparative analysis from Indonesia

Macroeconomic policy (fiscal and monetary) dynamics are interesting to analyze, especially considering corporate performance. This paper aims to determine the effect of macroeconomic policy on the company’s profit rate. Effectiveness of tax revenue (ETAX), realization of tax revenue (RTAX), Bank of Indonesian rate (BIRT), investment growth (INVG), realization of investments (RINV), infrastructure fund allocation rate (INFR), and realization of infrastructure funds (RINF) are macroeconomic policy variables. This study uses a sample of 256 companies listed on the Indonesia Stock Exchange (IDX) in 2005–2019. This paper employs such methods as GMM, using Wald-test and Sargan’s test. GMM estimator result shows that the instrument of infrastructure fund realization policy (RINF), investment growth (INVG), and investment realization (RINV) affect the company’s profit rate (PROF). Therefore, companies need to pay attention to the government development plans, investment growth, and investment realization, which can improve company performance. The result, government’s development for the 2005–2009 and 2015–2019 periods shows a significant difference in companies’ ability to generate profits. AcknowledgmentsWe would like to thank the Department of Management, Faculty of Economics and Business, Universitas Islam Nahdlatul Ulama Jepara (Unisnu), and the Institute of Research and Community Services (LPPM) Unisnu Jepara Indonesia, which has supported this study.

MONETARY PROCESSES PECULIARITIES DURING THE CRISIS IN UKRAINE AND ADJUSTMENT OF MONETARY POLICY

Abstract. The purpose of the article is to determine the monetary processes peculiarities during the crisis period of economic development and areas of monetary policy adjustment. The article presents the results of the main monetary indicators of Ukraine for 2005—2020 dynamics regularities assessment. The cyclic nature of their dynamics with a cycle length of 12 months, an increase cyclical swing range and the level of «white noise» of random deviations from the cyclic dynamics line are confirmed. Entropy and entropy production are calculated for the main monetary indicators. The hypothesis that the monetary indicators dynamics uncertainty is determined by the uncertainty of the «white noise» of their random deviations from the lines of cyclic dynamics based on the calculation of the entropies of the dynamics and the dynamics of entropies is put forward and confirmed. Three groups of monetary indicators are formed according to the level of uncertainty in them. According to the research results, the monetary sphere of Ukraine dissipation was stated during the whole period of 2005—2020 with increase of its rates in time intervals, which preceded the crisis phenomena aggravation (07.2007—07.2008, 03.2013—01.2014, 01.2020—06.2020). The sources of uncertainty in the monetary sphere are identified: the amount of cash due to «cash — M0» with 5.4 months lag and the amount of cash due to «cash — M3» with 7.8 months lag. Based on the results of relations between monetary indicators analysis, the directions of monetary policy for overcoming the crisis phenomena in the monetary sphere of Ukraine are proposed. In particular, it is appropriate to change the restrictive monetary policy to an expansionary one, taking into account the lag of action in the relations between entropies / entropies production of the main monetary indicators.The obtained results can be of practical importance in the system of state regulation to stimulate monetary circulation not only in crisis but also in post-crisis periods, ensuring key monetary indicators long-term stability and monetary policy effectiveness improving. Keywords: monetary indicators, monetary aggregates, uncertainty, entropy, entropy production, dissipation, regulation, monetary policy. JEL Classification E50, E51, E52 Formulas: 1; fig.: 3; tabl.: 2; bibl.: 25.

Monetary Dynamics With Proof of Stake

In recent years blockchain consensus mechanisms based on Proof of Stake gained increasing attention as an alternative to Proof of Work, which requires high energy consumption. In its original version Proof of Stake hinges on the idea that, for a user, the likelihood to confirm the next block is positively related to the amount of currency units held in the wallet, and possibly also on the time length which the money has been unspent for. In a simple framework with risk neutral users we provide some early insights on the monetary equilibrium of Proof of Stake based platforms. In particular, we find that the aggregate demand and supply of currency may not coincide, which implies that users could hold suboptimal quantities of the currency. Furthermore, we also discuss how symmetric stationary states of the system could be implausible. As a consequence, a long run uniform distribution of money would seem unlikely unless appropriate measures are introduced.

Monetary dynamics in a network economy

We develop a tractable model of price dynamics in a general equilibrium economy with cash-in-advance constraints. The dynamics emerge from local interactions between firms that are governed by the production network underlying the economy. We analytically characterise the influence of network structure on the propagation of monetary shocks. In the long run, the model converges to general equilibrium and the quantity theory of money holds. In the short run, monetary shocks propagate upstream via nominal changes in demand and downstream via real changes in supply. Lags in the evolution of supply and demand at the micro level can give rise to arbitrary dynamics of the distribution of prices. Our model provides an explanation of the price puzzle: a temporary rise in the price level in response to monetary contractions. In our setting, the puzzle emerges under two assumptions about downstream firms: they are disproportionally affected by monetary contractions and they account for a sufficiently small share of the wage bill. Empirical evidence supports the two assumptions for the US economy. Our model calibrated to the US economy using a data set of more than fifty thousand firms generates the empirically observed magnitude of the price level rise after monetary contractions.

Sensitivity of Foreign Direct Investment to Monetary Policy Dynamics in Nigeria

Due to the recent slowdown in foreign direct investment in Nigeria, this study considered it necessary to look at the monetary policy dynamics of Nigeria to ascertain if there are gaps in transmission processes. The study made use of annual data from 1988 to 2019 on Foreign Direct Investment (FDI) and four other monetary policy variables; Liquidity Ratio, Monetary Policy Rate, Prime Lending Rate and Degree of trade Openness collected from the globaleconomy.com and Central Bank of Nigeria Statistical Bulletin to examine the relationship between Foreign Direct Investment (FDI) and monetary policy dynamics using Autoregressive Distributive Lags. The major findings are; that monetary policy rate and degree of trade openness have negative and significant relationship with foreign direct investment, while liquidity ratio and prime lending rate insignificantly relate to the foreign direct investment. However, since monetary policy rates is disclosed to significantly but negatively relate to foreign direct investment, the central bank of Nigeria should reduce further the rate in order to woo foreign investors to do more business in Nigeria. Again, since globalization and trade liberalization have totally removed the issue of countries being in the state of autarky (closed economy), most of the beggars thy neighbours policies should be discarded at least to enhance the degree of trade openness. The Central Bank of Nigeria should also conduct the monetary policy with the aim of encouraging foreign investment in Nigeria. Keywords: FDI, Monetary Policy, ARDL, Nigeria DOI: 10.7176/RJFA/11-16-06 Publication date: August 31 st 2020

The Contribution of Maurice Allais to Contemporary Macroeconomics: From French Planning to National Accounting

__kindeditor_temp_url__If the history of macroeconomics is still largely associated with John Maynard Keynes’ masterpiece, The General Theory of Employment, Interest and Money (Keynes, 1936), macronomics also includes a branch of economics which has gained recognition through the use of mathematical models, the notion of general equilibrium, the development of an empirical basis (applied economics), and the evaluation of the effects of economic policy. These elements of macroeconomic theory are found in Maurice Allais’ work, mainly his Théorie du rendement social (Allais, 1946) and his Fondements comptables de la macroéconomie (Allais, 1954). In the aftermath of the Second World War, Allais was able to use a corpus composed of a theory—the Walrasian General Equilibrium, a doctrine—competitive planning, an empirical basis—his work on national accounting and economic policy prescriptions, “la planification à la francaise” and monetary dynamics. This work, combined with the development of national statistics and national accounting, highlights the French tradition of economic thinking and reminds us, that in the history of economic thought, the Keynesian precepts took some time to “colonize” the minds of French economists.

Forecasting U.S. money growth using economic uncertainty measures and regularisation techniques

This paper examines the out-of-sample forecasting properties of six different economic uncertainty variables for the growth of the real M2 and real M4 Divisia money series for the U.S. using monthly data. The core contention is that information on economic uncertainty improves the forecasting accuracy. We estimate vector autoregressive models using the iterated rolling-window forecasting scheme, in combination with modern regularisation techniques from the field of machine learning. Applying the Hansen-Lunde-Nason model confidence set approach under two different loss functions reveals strong evidence that uncertainty variables that are related to financial markets, the state of the macroeconomy or economic policy provide additional informational content when forecasting monetary dynamics. The use of regularisation techniques improves the forecast accuracy substantially.

Recent Developments in Macro-Econometric Modeling: Theory and Applications

Developments in macro-econometrics have been evolving since the aftermath of the Second World War.[...]

Dynamism of Monetary Transmission Mechanism in Nigeria: Interest Rate and Market Capitalization Causality Evidence

The potency of monetary transmission channels anchors the process by which interest rate movements and other cardinal aggregates influence critical financial fundamentals in an economy. This study, thus, examines dynamism of the monetary transmission mechanism with focus on the causality of interest rate and market capitalization in the Nigerian economy. Time series data covering a period of 36 years (1981 - 2015) were extracted from publications of monetary authorities and related agencies, including annual reports of Deposit Money Banks (DMBs) in the country. Facilitated by E-Views software, the analytical proceedings generated the required statistical outcomes in terms of coefficient of correlation (r), coefficient of determination (R2), t-statistic, and F-statistic. Granger causality test was also conducted to clearly establish the direction of causality between the focal variables. Essentially, the null hypothesis is rejected as probability of the F-statistic is less than the specified 0.05 level of significance. The granger causality test statistics run from four interest rate components to the operational capital market fundamental (with F-statistics of 5.758, 5.540, 4.209,and5.656; as well as probability values of 0.008, 0.009, 0.002, and 0.009 respectively). In view of the analytical outcomes, it is recommended that interest rate components be efficiently synergized to boost investors’ confidence and further drive monetary policy dynamics towards greater financial system vitality and sustainability in Nigeria.

Coping With Collapse: A Stock-Flow Consistent Monetary Macrodynamics of Global Warming

This paper presents a macroeconomic model that combines the economic impact of climate change with the pivotal role of private debt. Using a Stock-Flow Consistent approach based on the Lotka–Volterra logic, we couple its nonlinear monetary dynamics of underemployment and income distribution with abatement costs. A calibration of our model at the scale of the world economy enables us to simulate various planetary scenarios. Our findings are threefold: 1) the +2 °C target is already out of reach, absent negative emissions; 2) the long-term (resp. short-term) results of climate change on economic fundamentals may lead to severe economic consequences without the implementation (resp. in case of too rapid an application) of proactive climate policies. Global warming (resp. too fast transition) forces the private sector to leverage in order to compensate for output and capital losses (resp. to lower carbon emissions), thus endangering financial stability; 3) Implementing an adequate carbon price trajectory, as well as increasing the wage share, fostering employment, and reducing private debt make it easier to avoid unintended degrowth and to reach a +2.5 °C target.

A Historical Retrieval of the Methods and Functions of Monetary Policy

There exists a broad implicit agreement that steering the monetary policy has important consequences for the whole economy (Friedman, 1968). This book uses topic classification to present a historical retrieval of the main theories and applications of the monetary policy within different schools of economic thinking and across history. From Humes’ automatic price-species flow in the 17th century, to the Keynesians, Monetarists and Austrians perspectives of the monetary dynamics in the beginning of the 19th century. The second chapter provides a general overview about how the monetary authority can fine tune monetary indicators in response to business cycle shocks. This part will discuss the monetary transmission mechanisms that represent the different means of interaction between monetary tools together and their impact on the real economy. In this context, the concept of inflation targeting will be elaborated in details while explaining its main institutional and economic prerequisites. The third and final chapter is devoted to giving an overview of the Egyptian monetary policy from 1990 to 2010 prior to the Egyptian revolution. The detailed analysis disaggregates this period into three eras: the first starts from 1991 till 1996 (ERSAP era), the second from 1996 till 2003 (Transitional era), and the third from 2003 till 2010 (towards Inflation Targeting era). This part of the book covers the broad changes occurred in the Egyptian monetary regimes and how well the successive governments used various monetary tools to achieve their policy goals and to mitigate real economic problems like unemployment and inflation.

Monetary Policy, Volatility Risk, and Return Predictability

We document a strong predictive power of macroeconomic volatility series for stock and bond returns before 1980, and a significant decline in this power during the Great Moderation. We explore these findings using an equilibrium model with monetary policy and several shocks with time-varying volatility. The model captures the return predictability observed in pre-1980 data, while matching salient properties of U.S. macroeconomic and financial data. The decline in return predictability is consistent with changes in both monetary policy and shock dynamics. While an increase in the response to inflation in the interest-rate policy rule reduces macroeconomic volatility, more persistent cost-push shocks with reduced variation in volatility explain the decline in return predictability.

A Note on Causation, Logical Implication, and the Ordering of Variables in Equations

Changkeun Kim (2016) reiterates his charge that there is circular reasoning in Freeman and Kliman’s definition of the Monetary Expression of Labour Time (MELT). Kim also charges that the Temporal Single System Interpretation (TSSI) of Marx’s value theory does not yield falsifiable conclusions, because it does not predict prices. Both charges depend logically on an erroneous claim about what an arithmetic equation consists of. Kim holds that an equation necessarily implies a causal relation by virtue of the order in which it is written. This is not so. The order in which an equation is written tells us nothing about the causal relations between the variables in it, and such an interpretation of the meaning of an equation contradicts the literature on the subject. Both charges therefore fall once this claim is recognised to be erroneous. In fact, causal explanations must come from outside the equation system. We show that both the MELT and market prices are necessarily indeterminate within the TSSI since it is an interpretation of Marx’s value theory to which the determination of market prices and the MELT are external. We briefly examine Kim’s derivation of the relation between the gold MELT and the actual currency MELT and show that the latter, in his own theory, is indeterminate. Thus, his own theory of the MELT is subject to exactly the same criticism that he levels at ours, proving that within the value equations, the MELT is necessarily indeterminate. The way forward is to cease the attempt to discredit legitimate theories of the MELT, especially that of the TSSI, by purely logical means. Instead, writers should concentrate on studying and theorising the real phenomena of capitalist monetary dynamics on the foundation of Marx’s value theory, on which there is now substantial potential agreement. We argue that the TSSI of this theory constitutes the best currently available foundation for this collective enterprise.

A Unified Theory of Monetary Dynamics

<p>In the end, the only and eternal vocation of money is circulation. This circulation causes the contrary effect to income expansion, studied by the income velocity of circulation of money, by the income multiplier and by the bank money multiplier. These three issues are thought to belong to the same operation. Therefore, a unified money theory can be established.</p><p>A dynamic economy finances investments with the savings existing in the system but, the economy is simultaneously growing in real and nominal terms. Such growth in circulating capital is only possible through the creation of money in the economic system. In general terms, the system tends to finance growth with the spontaneous creation of money.</p>

Structural breaks and monetary dynamics: A time series analysis

This article investigates the stability of money demand and implications for the conduct of monetary policy in Egypt. The econometric procedures include testing for structural breaks at unknown dates and conditioning on the most recent break for estimation and forecasting. Test results provide evidence for regime shifts and lend support to the use of short-term interest rate as the main policy instrument. Sources of structural change are detected by a state-space model. Also, using a structural vector autoregressive (VAR) model for short-run dynamics, it is found that narrow money is a more appropriate monetary aggregate for policy analysis.