Monetary Measures Research Articles

Комітети монетарної політики в умовах спалаху пандемії коронавірусу

Introduction. In conditions of systemic shocks, such as the coronavirus pandemic, monetary policy decision-making requires collegiality. Monetary policy committees (MPCs) are a successful institutional solution in the conditions of information asymmetry and available alternatives for responding with monetary measures to dynamic changes in the economy and shocks. Problem Statement. In Ukraine, at the level of the central bank and in the scientific opinion, the role and status of the MPCs in ensuring financial stability is underestimated, which is perceived more as a working body of the Board of the National Bank of Ukraine (NBU). The formation of its composition which includes only top managers of the NBU does not guarantee against the adoption of biased or short-sighted decisions, which can lead to negative consequences for economic growth. There is a need to bring the principles of this collegial body into line with the best practices of central banks. Purpose.To generalize international experience in the institutional development of national central banks in the direction of the corporate structure of the monetary policy committee to ensure greater efficiency of its work and the application of best practices in Ukraine. Methods. Content analysis, methods of scientific abstraction, comparative analysis of statistical information published by central banks of countries that are not part of the European Central Bank system were used. Results. The coronavirus pandemic did not cause significant changes in the organization of committee activities, but it increased the importance of involving external experts to assess and forecast the situation. The analysis of the biographical data of such persons showed that they are highly qualified specialists, recognized in the country and by the international community. In the decisions of individual political bodies the reference to the expectations of the market participants (for example, the prediction of the decision related to maintainance , increase or decrease of the discount rate) deserves special attention as well as the requirement for the members of the body to observe a period of “silence” for at least one week, which means refraining from comments on the statement of position before the meeting. Of course, the practice of involvement the representatives of the Ministry of Finance in meetings of the committee without voting rights is of interest. Conclusions. Monetary policy committees work primarily to ensure price stability, but with a perspective for economic development. The main functions of MPCs in most European countries are not limited to setting the discount rate, but cover reserve requirements, approval of liquidity support programs and refinancing of banks, operations of the central bank in the foreign exchange market and with securities. For Ukraine, it is considered optimal to form MPCs not under the Board, but under the National Bank itself in order to raise its status to the level of a decision-making body. For this amendments should be made to the Law “On the National Bank of Ukraine” and regulations or provisions on the MPCs should be developed. The participation of external experts in the committee is necessary for making informed decisions. Their level of qualification should be confirmed by a doctorate in economics or finance and the status of professor, a solid list of scientific publications and experience of participation in international research. Management experience in public financial corporations, central banks and departments or large financial institutions is desirable. In our opinion, the participation of politicians in the committee is inappropriate, because in the current conditions it will only undermine the independence of the central bank.

How much does it cost the river near my house? An integrated methodology to identify a value for ecosystemic services (The case of Vjosa Valley in Albania)

This study aims to identify and evaluate ecosystem services and calculate the total economic value of Vjosa Valley, an endangered riverine ecosystem. An instrumental-deliberative approach is used with experts and Albania’s general public. The results show that experts highly evaluate Vjosa Valley for its cultural ecosystem services, while the general public assigns higher importance to regulation ecosystem services. Two monetary measures have been calculated, WTP and WTA. The results indicate no significant differences between WTP and WTA when using a payment card. Participants will pay, on average, 7% of their monthly incomes to protect Vjosa Valley from Hydropower Construction. This study was developed during the pandemic of COVID-19, and the results may be affected by the context; however, it represents the first economic evaluation of this rare ecosystem in Albania and Europe.

Exchange Rate Pass-through Dynamics: VAR Evidence for Kenya

A VAR framework with exogenous variable is considered to analyse the exchange rate pass-through dynamics in Kenya. Monthly time series data from January 2006 to December 2022 is used. Six endogenous variables namely; US dollar exchange rate, broad money supply, total import, 20 Nairobi stock exchange share index, consumer price index and 91 days treasury bond rate sourced from the central bank of Kenya were considered. Global food price index and oil prices per barrel sourced from statista and Murban Adnoc respectively are the exogenous variables. Unit root test is first performed to test for stationary in line with VAR assumptions. Oil price and total import are the only stationary variables, while the other variables are of integrated order 1. Secondly, a VARX (2,0) is estimated, which is statistically significant at 5% level. Thirdly, Granger causality test is performed, that provide evidence of causality for 20 Nairobi stock exchange share index, consumer price index and broad money supply with respect to other endogenous variables. In addition, VARX(2,0) is converted to MA(2) to develop US dollars impulse response function. There exist high level of volatility for all variables. Finally, a forecast error variance decomposition following Cholesky decomposition shows significant proportion of variance explained by other variables respectively. Kenya’s policy makers need to build strong framework for monetary policy and exchange rate control measures in safeguarding the performance of macroeconomic indicators.

Вплив деяких зовнішніх чинників на фінансову нестабільність в Україні

Introduction. The nature of Ukraine's economic development over the past thirty years reflects its dependence on global financial and economic cycles. The nature of this dependence lies in the stable interrelationship of the global commodity markets with factors of internal financial stability. One of the important ways to overcome such dependence is a nationally-rooted monetary policy aimed at supporting domestic economic activity and weakening the influence of the external environment on financial stability. Problem Statement. Increasing the internal financial stability of the national economy and the regulatory potential of monetary policy by limiting their dependence on global economic cycles. Purpose: Formalization of the relationship between the financial stability of the national economy and changes in the global commodity markets and the identification of prospective monetary policy measures to mitigate them. Methods. General scientific and special methods are used : theoretical generalization, systematic, abstract-logical and comparative analysis, synthesis, grouping. Results. The article summarizes the regularities that determine the cyclical repetition of financial and economic crises in Ukraine. In particular, it was noted that the stability of small open economies, a significant share of whose income is formed by the export of raw materials, largely depends on the situation on the global raw materials markets. Cyclical downturns in these markets cause financial crises, which lead to the decapitalization of small open economies and thus make their structural innovative development impossible. Conclusions. In order to ensure the sustainable development of small open raw material economies, it is necessary to carry out an appropriate institutional policy of the state aimed at ensuring the development of a more complex economic base with a departure from raw material dependence. This requires a corresponding modernization of monetary policy in terms of expanding control over the movement of capital flows, limiting the volatility of the exchange rate.

Inflation Theory: A Theoretical Review of Demand-Pull and Cost-Push Inflation Effect on Nigeria Economy

Inflation has become a pressing issue in Nigeria, affecting the cost of living and infrastructure development. Despite tight fiscal and monetary measures, inflation continued to rise at unprecedented rates in Nigeria. The present seminar paper aims to provide insight into the theoretical understanding of Demand-pull and Cost-push inflation and explore its causes and effects on the economy and individuals. Using the Desk research method, the researcher explores empirical data from 33 published articles for the study. The empirical literature reviewed found that Demand-pull and cost-push inflation are different and have different causes and effects on individuals and the National economy. It was found that Demand-pull inflation is driven by excess demand, leading to higher prices, while Cost-push inflation is caused by increased production costs, which result in higher prices. It was concluded that Inflation is a complex economic phenomenon that significantly impacts individuals and businesses. Understanding the differences between demand-pull and cost-push inflation is essential for policymakers and economists in formulating strategies to combat inflation and maintain a stable economy. The researcher recommended, amongst others, that developing appropriate policies and addressing the root causes of inflation make it possible to mitigate inflation effects and promote sustainable economic growth.

Unconventional Monetary Measures During the COVID-19 Pandemic: A Case Study for Central and Eastern European Countries

Abstract The COVID-19 pandemic had major negative repercussions on the countries from Central and Eastern Europe (CEE), which experienced almost similar declines in the economy in 2020. Against this background, central banks from CEE initiated unconventional monetary policy measures aimed at mitigating the economic and social effects of the pandemic. The purpose of this article is to analyse the CEE central banks’ response to the pandemic crisis, i.e., the response of the Czech Republic, Hungary, Poland, and Romania, and to unveil the particularities of the unconventional monetary policy adopted by these states. To achieve this goal, the article presents a chronology of the main decisions adopted by CEE central banks during the pandemic and the dynamics of these central banks’ assets. The main findings suggest that CEE monetary authorities, like major central banks, initiated the first measures to counter the negative effects of the pandemic on the economy in March 2020. All of them cut the key interest rate and injected liquidity through open market operations in order to support lending to the real economy. However, the magnitude of these measures was different depending on the economic and financial systems’ peculiarities. Moreover, not all of them initiated purchases of assets or new lending facilities.

Climate change adaptation preferences of winemakers from the Rioja wine appellation

This paper uses a discrete choice experiment to elicit winemakers' preferences towards climate change adaptation options in the Spanish Rioja region. The experiment includes different potential adaptation strategies such as relocation, the use of various grape clones, the installation of an irrigation system, the construction of vegetative or artificial structures to shade the vines, and oenological adaptations. The results show that the most widely accepted strategy is the installation of irrigation and shading structures. In contrast, the least accepted strategy is relocating, which is a costly and long-term solution. The monetary measures obtained are useful for policymakers because they show how much financial assistance will be required to adapt to climate change and maintain the high-quality wine production of the region. We also investigate the precision that can be expected from choice models with small samples through a simulation study, demonstrating the possibility of recovering true parameter values with small sample sizes using a specific experimental design tailored to the attributes and levels of the study.

The effects of the ECB’s unconventional monetary policies from 2011 to 2018 on banking assets

We examine the effects of all three major European Central Bank (ECB) unconventional monetary policies since 2011 for euro area banks’ holdings of loans, government securities and cash deposited in central banks. The three ECB’s policies are long-term refinancing operations (LTROs), asset purchase programs and the ECB’s interest rate at its deposit facility. We also compare the responses of non-crisis and crisis countries to these policies. Our evidence indicates that the ECB’s unconventional monetary policy measures increased bank loans across the euro area countries. The second round of LTROs, also known as targeted LTROs (TLTROs), conditioned additional lending on banks. This change had substantially larger effect on total lending by banks. The computed effects of the average sizes of LTROs and TLTROs indicate that in non-crisis countries, LTROs increased bank loans by 7.6 % of assets and TLTROs increased bank loans by 16.4 % of assets; the increases were 8.4 % and 14.6 % for LTROs and TLTROs, respectively, in crisis countries. We find that both LTROs and TLTROs were associated with decreases in government securities held by banks in non-crisis countries while the LTROs was associated with increases in government securities held by banks in crisis countries.

Distribution of the impact of monetary and fiscal policy instruments by technological modes and sectors of the economy

The subject of the study is the impact of monetary and fiscal policy instruments on the functioning of the structural elements of the economy, represented by sectors and technological structures. The purpose of the paper is to establish how the monetary and individual fiscal policy instruments influenced the structure of the Russian economy. The methodology consists of the “distributed control” doctrine, which modifies Tinbergen’s principle of “goals-instruments” of macroeconomic policy, since it allows to reveal the unequal power of the instrument by objects of economy, structural and empirical analysis, correlation-regression analysis, with which it is possible to show a picture of the distributed influence of monetary and fiscal policy instruments. A general algorithm of research and application of the doctrine of “distributed management” at the macroeconomic level are developed — by technological structures and economic sectors, which made it possible to obtain a picture of the distribution of the influence of monetary policy on economic objects, to identify the significance of individual fiscal policy instruments. The general result of the research is that the doctrine of “distributed management” used not only modifies the classical theory of economic policy, but also confirms that, in addition to the economic structure, the impact structure of standard monetary and fiscal policy instruments arises. The distribution of the most significant instruments of monetary and fiscal policy by technology and three sectors of the Russian economy to ensure its growth in the period 2011–2021 are obtained. It was found that the development of high-level processing and technological modes were more influenced by monetary than budgetary instruments, and the transfer of resources to the national welfare fund hindered their development. Fiscal policy measures — revenues, expenditures, budget deficit/surplus — did not have an equal impact on the development of the considered sectors of the economy. The prospect of further research is to develop a software module that includes ongoing analysis and automates calculations based on available statistics to change of monetary and fiscal policy measures in Russia aimed at developing the manufacturing sector and high-tech.

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.

Australian housing markets, the COVID-19 pandemic and black swan events

PurposeThis study aims to examine the impact of lending liquidity on house prices especially during black swan events such as the Global Financial Crisis of 2007–08 and COVID-19. Homeownership is an important goal for many, and house prices are a significant driver of household wealth and the wider economy. This study argues that excessive liquidity from central banks may be driving house price increases, despite negative changes to fundamental drivers. This study contributes to the literature by examining lending liquidity as a driver of house prices and evaluating the efficacy of fiscal policies aimed at boosting liquidity during black swan events.Design/methodology/approachThis study aims to examine the impact of quantitative easing on Australian house prices during back swan events using data from 2004 to 2021. All macroeconomic and financial data are freely available from official sources such as the Australian Bureau of Statistics and the nation's Central Bank. Methodology wise, given the problematic nature of the data such as a mixed order of integration and the possibility of cointegration among some of the I(1) variables, the auto-regressive distributed lag model was selected given its flexibility and relative lack of assumptions.FindingsThe Australian housing market continued to perform well during the COVID-19 pandemic, with the house price index reaching an unprecedented high towards the end of 2021. Research using data from 2004 to 2021 found a consistent positive relationship between house prices and housing finance, as well as population growth and the value of work commenced on residential properties. Other traditional drivers such as the unemployment rate, economic activity, stock prices and income levels were found to be less significant. This study suggests that quantitative easing implemented during the pandemic played a significant role in the housing market's performance.Originality/valueGiven the severity of COVID-19, policymakers have responded with fiscal and monetary measures that are unprecedented in scale and scope. The full implications of these responses are yet to be completely understood. In Australia, the policy interest rate was reduced to a historic low of 0.1%. In the following periods house prices appreciated by over 20%. The efficacy of quantitative easing and associated fiscal policies aimed at boosting liquidity to mitigate the impact of black swan events such as the pandemic has yet to be tested empirically. This study aims to address that paucity in literature by providing such evidence.

Assessment of Predisposing Factors to Female Students Susceptibility to Ill-Health in Higher Educational Institutions in Benue State, Nigeria

The study aimed to examine the predisposing factors to female students’ susceptibility to ill-health in higher educational institutions in Benue State. The study was essentially a descriptive survey research. A total of 180 female students from three higher institutions of learning responded to a self-developed 20 items questionnaire with a Cronbach alpha reliability coefficient of .65. Results from the descriptive analysisshows that environmental factors 75.6%, genetic/physiological factors 72%, and lifestyle 80% plays important roles as predisposing factors that influences the female students’ susceptibility to ill-health. The endogenous factors contribution to female students’ susceptibility to ill-health include genetic traits 16.3%, menstruation 73.7%, and hormone activity 10.6%. The exogenous factors have overcrowding 58.8%, poor sanitary condition 86.3%, use of poor-quality water 32.6%, poor quality of food consumed 10.6%, unhealthy environment 56.8%, risky behaviours such as drinking alcohol, smoking, abortion contribute 55.8%, body exposure from indecent dressing 28%, and exposure to severe hot weather 7%. The findings indicate that the female students genetic/physiological constitution, unhealthy environment and lifestyle in these schools could influence their susceptibility to mental and physical health disorder or disease. Thus, it is important and necessary for the Federal and State government who owned these schools gives priority attention to ensure that adequate construction of more infrastructure for healthy accommodation and learning are provided. This can be achieved by putting in place strategic monetary policy measures to finance adequate construction of infrastructures and proper maintenance of the academic environment.

Monetary Policy and Financial Stability: Lessons from the Global Financial Crisis

The Global Financial Crisis (GFC) of 2007-2008 was a watershed moment that reshaped the landscape of monetary policy and financial regulation worldwide. This research paper delves into the pivotal role of monetary policy in fostering financial stability, drawing lessons from the tumultuous events of the GFC. Through an extensive review of literature and empirical analysis, this paper examines the various monetary policy tools employed by central banks to mitigate systemic risks and promote stability in the aftermath of the crisis. The paper begins by elucidating the complex interplay between monetary policy, financial markets, and systemic risk, emphasizing the importance of maintaining a delicate balance between price stability and financial stability. It explores the conventional and unconventional measures adopted by central banks during the crisis, including interest rate adjustments, liquidity provision, and asset purchase programs, and assesses their effectiveness in stabilizing financial markets and averting systemic collapse. Furthermore, the paper evaluates the evolution of monetary policy frameworks in response to the lessons learned from the GFC, such as the adoption of macroprudential tools and the reassessment of inflation targeting regimes. It analyzes the challenges and trade-offs faced by policymakers in pursuing dual objectives of price and financial stability, highlighting the need for a holistic approach to monetary policy formulation. Moreover, this paper examines the implications of post-crisis monetary policy measures on financial markets, asset prices, and economic activity, addressing concerns regarding moral hazard, excessive risk-taking, and asset price bubbles. It also discusses the role of regulatory reforms in strengthening the resilience of the financial system and enhancing the effectiveness of monetary policy transmission mechanisms.

Estimating fuzzy measures of deprivation at local level in Tuscany.

In this paper we estimate monetary and non-monetary poverty measures at two sub-regional levels in the region of Tuscany (Italy) using data from the ad-hoc Survey on Vulnerability and Poverty held by Regional Institute from Economic Planning of Tuscany (IRPET). We estimate the percentage of households living in poverty conditions and three supplementary fuzzy measures of poverty regarding deprivation in basic needs and lifestyle, children deprivation, and financial insecurity. The key feature of the survey is that it was carried out after the COVID-19 pandemic, therefore, some of the items collected focus on the subjective perception of poverty eighteen months after the beginning of the pandemic. We assess the quality of these estimates either with initial direct estimates along with their sampling variance, and with a secondary small area estimation when the formers are not sufficiently accurate.

Moderate Multidimensional Poverty Index: Paving the Way Out of Poverty

Eradicating poverty in all its forms, everywhere, requires indicators that measure sustainable pathways out of poverty, and not only the absence of acute poverty. This paper introduces a trial Moderate Multidimensional Poverty Index (MMPI) that reflects moderate rather than acute levels of multidimensional poverty. The MMPI adjusts nine of the 10 indicators of the global Multidimensional Poverty Index (global MPI) to reflect moderate poverty and create a meaningful superset of the acutely poor population. Although data-constrained, the trial MMPI outlines a methodology and potential indicators for a measure that would: (i) be meaningful and comparable across populations at higher levels of development; (ii) align with higher standards defined in Agenda 2030; and (iii) provide insight into aspects of intrahousehold deprivation. The MMPI is illustrated empirically using nationally representative household surveys from Bangladesh, Guatemala, Iraq, Serbia, Tanzania and Thailand. The results confirm the added value of having three nested measures of destitution, acute, and moderate multidimensional poverty. The MMPI also complements monetary measures with informative differences in poverty levels observed. The results demonstrate that a Moderate MPI is a desirable global poverty index, which is likely to illuminate thus far hidden aspects in of multidimensional poverty, such as intrahousehold deprivations in education. Challenges remain regarding data availability, and further study across additional countries is required before the MMPI structure can be finalised.

"Monetary policy measures and strategies in the context of the adoption of the euro currency "

"The importance of knowing the effects resulting from the adoption and implementation of monetary policy decisions on economic variables is a decisive factor of this article, which directed our attention to the issue of monetary policy measures. Taking into account the thematic area, this concept falls, without exception, in the field of the monetary economy, so it allows the author to carry out a rigorous, complex analysis supported by notions found in the field of finance, economic-financial integration, international relations, as well as macroeconomics. Identifying the behavior of central banks in establishing monetary policy strategies constitutes the fundamental objective of the paper and can provide a conclusive and appropriate picture of both the objectives considered and their prioritization. A standard approach in this context is to estimate a central bank reaction function in the form of a Taylor rule. By using the previously mentioned method, the identification of the final objectives of the monetary policy authorities through the lens of the promoted policy is considered. The analysis will focus on states such as Romania, Hungary, Poland, and the Czech Republic, all committed to adopting a single currency according to the Treaty on the Functioning of the European Union. The present analysis has brought to the fore the monetary policy measures and strategies used mainly by Central and Eastern European central banks. "

INTERRELATIONSHIP OF INFLATION, EXCHANGE RATE AND INTEREST RATES IN THE CONTEXT OF HUNGARY'S STRATEGIC POLICY

INTERRELATIONSHIP OF INFLATION, EXCHANGE RATE AND INTEREST RATES IN THE CONTEXT OF HUNGARY'S STRATEGIC POLICY

The Effect of Financial Policies Implemented during COVID-19 on Bank Credit in the Central American Region

As a result of the COVID-19 pandemic, governments and central banks worldwide implemented a wide range of policies to support households and businesses, among them a series of measures to support the availability of credit. This paper quantitatively assesses how monetary and regulatory policy measures helped lessen the effect of the economic downturn on bank credit to the private sector, and on non-performing loans, and focuses on small EMEs, which have been the subject of little analysis in this regard. Specifically, it looks at a number of countries in the Central American region. The resulting estimates show that the policies implemented substantially reduced the negative impact of the crisis on bank credit and nonperforming loans, and that the measures largely responsible for this mitigation were regulatory rather than monetary.

A preference-based theory unifying monetary and non-monetary poverty measurement

Multidimensional poverty measures are increasingly used in practice even though they face criticism and generate long-lasting debates. These contentions primarily find their origin in the divergence between standard poverty identification practices and a preference-based definition of the poor. This paper fills this gap by proposing a poverty measurement theory that (i) adopts a preference-based definition of the poor, (ii) acknowledges that the relevant preference is only partially known and (iii) encompasses both market and non-market dimensions of well-being. A preference-based definition satisfying two mild substitutability assumptions implies that two types of individuals are poor: individuals who experience an extremely low outcome in at least one dimension (“extremors”) and individuals who cumulate moderately low outcomes in several dimensions (“cumulators”). The paper shows that standard identification practices are not flexible enough to properly identify both types of poor individuals and proposes a simple refinement that improves on this issue. The theory provides a conceptual foundation from which practitioners may derive guidance for the many choices they face.

Twitter sentiment and stock market: a COVID-19 analysis

PurposeUsing textual analysis the authors study the relationship between social media sentiments and stock markets during the COVID-19 pandemic.Design/methodology/approachThe study analysis is based on a sample of 1,616,007 tweets over the period January to June 2021 for seven countries. The authors process the tweets via the VADER analyzer thereby producing both positive and negative sentiment measures.FindingsParticularly, the authors prove that higher positivism is associated with a short-term increase in stock prices. On the other side, negativism relates inversely to stock prices with long-term impact, in the case of English-spoken countries. Notably, the study results remain robust to the inclusion of various control variables, including virtual fear and Google vaccine indexes. Finally, the authors prove that positivism is associated with higher returns and lower volatility in the short-run, while negativism is linked with lower returns in the short run.Practical implicationsThe study analysis also has significant policy implications for researchers, investors and policymakers. First, researchers can employ our measures to quantify market sentiments and expand their research arsenal to incorporate social media trends, thus providing better explanatory power. Second, during times of severe uncertainty such as in a pandemic period, investors could beneficially take into account our textual measures and empirical results when using asset pricing models or constructing their portfolios. Third, the finding that the stock market is heavily governed by sentimental behaviors, especially during crisis periods, implies that policymakers including central banks, governments and capital market commissions must consider these sentiments before exerting their policies. In this regard, governments can effectively develop policy tools and approaches to manage recovery from the pandemic, which translates to greater long-term economic resilience. Moreover, central banks should accordingly adjust their monetary policy measures in order to stabilize financial markets, and by extension, to stop the pandemic from turning into a renewed financial crisis. For example, asset purchase program is considered the main instrument of this kind of intervention.Originality/valueThe authors confirm that this work is original and has not been published elsewhere, nor is it currently under consideration for publication elsewhere. The paper should be of interest to readers in the areas of finance.