Monetary Model Research Articles

Globalization of Economics and Politics of Antiinflation

 We can conclude that, in understanding of the essence of inflation, preference must be given to the conception according to which the inflation is the violation of the money turnover law, the violation that shows itself in the surplus of money stock compared to its real demand, or in the exchange depreciation followed by price increases without enriching the production quality. Among various monetary and non-monetary factors causing the inflation, the main ones are the growth of demand and the growth of costs (of shipping). In fact, mostly, the monetary and non-monetary factors of the price increases act simultaneously in economy. For the moment, there is no any perfect classification of inflation types in the economic literature. The expanded scheme of classification given in the paper is approximative and needs to be supplemented by inflation types which appear during the integration processes in the world. The low efficiency of the monetary model of anti-inflation regulation, applied in most of the countries in the world, made it necessary to use a new strategy against inflation, i.e. inflation targeting. It appeared as an intersection of new classical and new Keynesian theories, as a reaction to the weakening of results of monetary aggregates and exchange rate targeting.

Penerapan k-Means Clustering Berdasarkan Analisis RFM Terhadap Segmentasi Pembeli untuk Meningkatkan Strategi CRM

An industry requires a good strategy in running its business. Saga Bako is a small industry that sells various types of tobacco and its equipment. However, Saga Bako has not yet implemented a Customer Relationship Management (CRM) strategy in its service to buyers. It is necessary to segment customers to find out less profitable buyers and buyers who provide large profits. The use of data mining also contributes when segmenting customers through the use of purchase data. The methodology applied in this research is CRISP-DM with purchase data at Saga Bako from January to March 2022. The k-means algorithm is applied in the formation of clusters based on the Recency, Frequency, Monetary (RFM) model, with the help of Weka 3.8.5 tools. The Elbow method is used to determine the best number of clusters (k). The results obtained are from 47 buyers with 663 transaction data divided into three clusters, 26 low potential buyers, ten medium potential buyers, and 11 high potential buyers.

Managed anonymity of CBDC, social welfare and taxation: A new monetarist perspective

ABSTRACT China’s central bank digital currency (CBDC), e-CNY, is currently in a large-scale pilot stage. In this study, a new monetarist model, both theoretically and quantitively, is developed to assess the relationship between the managed anonymity feature of e-CNY, social welfare, and taxation. The findings are as follows. First, the introduction of managed anonymous CBDC affects the official and shadow economy by increasing the diversity of payment instruments and suppressing tax evasion, thereby improving social welfare and government tax revenue. Second, if CBDC is ‘cash-like’ in the sense that it offers relatively high anonymity, then issuing CBDC meets the public demand for anonymous small value payment services and enhances the individual welfare of most households. Third, if CBDC is ‘deposit-like’ in the sense that it offers relatively low anonymity, then issuing CBDC combats illegal transactions in the shadow economy, and increases the total amount of social welfare and government tax revenue. The model, calibrated to the Chinese economy, suggests that aggregate welfare and government tax revenue can be increased by up to 3.2% and 10%, respectively. These findings suggest that policy-makers can dynamically adjust the anonymity design of CBDC to better align it with changing policy objectives and economic conditions.

Liquidity, the Mundell–Tobin Effect, and the Friedman Rule

AbstractWe investigate how a positive relation between inflation and capital investment (the Mundell–Tobin effect, MT‐E) affects optimal monetary policy in a framework that combines overlapping generations and new Monetarist models. We find that inflation rates above the Friedman rule are optimal if and only if there is an MT‐E. In the absence of the MT‐E, the Friedman rule is optimal. With an MT‐E, increasing inflation above the Friedman rule leads to a first‐order welfare gain from increasing capital investment, and only to a second‐order welfare loss from reducing consumption in markets where liquidity matters.

On the Political Nature of “Market domination” in the energy sector (the 2008 Crisis)

This is the second article in the series. The first was devoted to the recombination of the world monetary model (Bretton Woods) 1971–1973. The trigger point for the recombination was the Nixon Shock (rejection of the gold fixing of the dollar). There was a replacement of the world equivalent of value (gold for oil), which remained “unnoticed” (not noticed) for a long time. 2008 cashed out the replacement. 1971 and 2008 cannot be considered independently of each other. This is not about cyclic failures (they are linear), but about the basic (cause of failures) flaw in the model. The reason is not a situational shortage of resources for growth, but the discriminatory nature of law as such, international law (regulations for disposing of growth effects based on parity of forces) in particular. 1971 and 2008 — déjà vu matrix, where the trigger (a factor that exacerbates a chronic disease) is a unilateral undermining (Nixon Shock and QE) of the regulations that determine the functioning of the world economy (devaluation of the norm). On both occasions the US played va banque . In 1971, the flaw was legalized, a new (G7) international format or “oil consumer cartel” arose. In 2008, it was proposed to institutionalize the flaw, to recognize it as an integral part of the overall model of growth. The proposal did not suit developing countries (primarily Russia and China). The crisis, which began as a financial breakdown, turned into a deep political confrontation.

The Two‐Pillar Policy for the RMB

ABSTRACTThis paper studies China's recent exchange rate policy for the renminbi (RMB). We demonstrate empirically that a two‐pillar policy is in place, aiming to balance exchange rate flexibility and RMB index stability via market and basket pillars. We further extend and validate the formulation that incorporates the so‐called countercyclical factor. Theoretically, we develop a flexible‐price monetary model for the RMB in which the two‐pillar policy arises endogenously as an optimal response of the government. We estimate the model by generalized method of moments and quantitatively assess various policy trade‐offs.

The Role of Automation from the Perspectives of the Monetary Model, Price Decomposition Model, and Demand-led Growth

Over the past decade, automation has fundamentally reformed the production process, enhancing productivity and allowing humans to rubber stamping trivial tasks. However, the levels of automation vary significantly among nations, and the impact of such disparity of the levels of automation between countries remains unexplored. Aiming to provide a theoretical framework on the effect of the levels of the automation in a broader context, i.e., effect on the real exchange rate, real purchasing power, and hence the international competitiveness, this paper incorporates the overlapping generation model, long-run price decomposition model, revised absolute advantage theory in the real exchange rate, and Thirlwall's balance of payment constraint growth model. Within all three models, automation expands the real production capacity in one economy and, thus, enhances international competitiveness. Moreover, this paper sheds light on future research on trade imbalance, the balance of payment between countries with similar economic characteristics except for their levels of automation.

The case for a positive euro area inflation target: Evidence from france, germany and italy

Using micro price data underlying the consumer price index, we estimate relative price trends over the product life cycle in France, Germany and Italy. Minimizing the welfare consequences of relative price distortions in the presence of these trends requires targeting a significantly positive inflation rate: the steady-state inflation rate jointly maximizing welfare in all three countries ranges between 1.1%-1.7%. The welfare costs of targeting an inflation rate of zero, as suggested by monetary models ignoring relative price trends, or of targeting 4% amount to several percentage points of consumption.

Monetary Valuation of Protected Wild Animal Species as a Contingent Assessment in North Sulawesi, Indonesia

Virtually every country has a problem with preserving protected wild animals, and some countries have their way of protecting animals through legal measures. Animals are a nation’s wealth, just as are forest timber and non-timber forest products. This asset has an economic value that is worth quantifying. Ecosystem assessment is becoming an increasingly crucial factor in determining how much the environment contributes to economic value. Such studies require additional monetary modeling and evaluation of non-market services. This research presents a willingness to pay (WTP) approach to calculate the value of protecting wild animal species. The study area was in North Sulawesi, one of Indonesia’s provinces located at the northern tip of Sulawesi Island. The questionnaire format for collecting data was the dichotomous choice contingency assessment method (DCCVM), and the sample size was 428 respondents. Based on willingness to pay, we assessed the contingency of single bounded dichotomous choice (SBDC) by estimating each protected animal’s average (mean) value in three classes, namely mammals, birds, and reptiles. The mean result of the monetary assessment of protected mammal species was IDR 1,801,870 (USD 124.27), IDR 836,670 (USD 57.70) for protected bird species, and IDR 819,700 (USD 56.53) for protected reptiles. Any loss in wild animals incurs a natural resource debt burden for future generations to repay, just as does forest loss. If we do not want to leave the forest empty for our future generations, we must continue implementing nature conservation measures, including the protection and restoration of wild animals.

Bitcoin as a Safe-Haven Asset and a Medium of Exchange

A monetary model is established to introduce that bitcoin does have the characteristics of a price rise when the economic situation is terrible under high risk aversion. At this time, Bitcoin has the property of a safe-haven asset, and when economic conditions are good and risk aversion is low, Bitcoin has a pro-cyclical nature. At this time, Bitcoin has a stronger property as a medium of exchange. To show the movement law of the bitcoin price, we make a logarithmic linearization of the model and simulation, and the result is consistent with the theoretical analysis. To better understand the role of bitcoin in the real economy, several standard portfolio models are used to measure the similarities and differences between gold and bitcoin in an investment portfolio. After the outbreak of COVID-19, bitcoin has shown stronger safe-haven asset properties.

Average inflation targeting and macroeconomic stability

I study the dynamic consequences of average inflation targeting in a tractable monetary model with sticky prices. I demonstrate that in the case in which the central bank attaches a relatively high weight on the distant past, average inflation targeting not only ensures local determinacy of equilibrium but is also capable of eradicating the liquidity trap problem—differently from standard Taylor rules. Specifically, I show the existence of a saddle connection from the deflationary steady state to the target steady state, along which reflation occurs in equilibrium due to limited and gradual increases in expected nominal interest rates.

Servitized Customer Segmentation Model for SMEs

The study's purpose is to develop and test a service-oriented customer segmentation model for manufacturing small and medium enterprises' (SMEs) business development. By acknowledging SMEs' lack of resources, the model aims to help companies establish strategies and organizational arrangements to overcome servitization's strategic and operational barriers. The model was initially developed based on the recency, frequency, and monetary (RFM) model. The RFM model was adapted to include installed base and different services delivered by manufacturers. The model helps manufacturers to focus on profitable after-sales customers to ensure long-term revenues by associating a specific service strategy to each cluster identified and developing offerings that fulfill specific customer needs. The authors collected data about 296 customers of an Italian manufacturing SME during 2019-2021 to offer the first validation and train of the tool developed according to the proposed framework.

The Impact of Intellectual Capital on Financial Performance of Small and Medium-sized Enterprises

The rapid growth of technologically advanced companies in the knowledge-based economy has driven corporate management to pay more attention to the importance of intellectual capital. Over the last two decades, several Intellectual Capital monetary models have gained in importance, due to the increasing need of firms to administer and control the efficiency of their intangible resources. In this context, the present study is conducted to examine the impact of the value creation efficiency of Intellectual Capital on the financial performance of small and medium-sized enterprises. Through a quantitative approach, this research sample consisted of 23 small and medium-sized enterprises and made use of correlation and multiple regression analysis as methods for treating the ambitioned. The results showed that the value creation efficiency of intellectual capital positively influences corporate financial performance. At last, the inclusion of relational capital efficiency, as well as the relationship examination of Intellectual Capital and other performance measures, are suggestions for future research.

The role of domestic and foreign economic uncertainties in determining the foreign exchange rates: an extended monetary approach

This study extends the monetary model of the exchange rate by incorporating news-based domestic and US economic policy uncertainties (EPUs). We consider 12 developed and developing economies and use monthly data covering 2000:M1 to 2017:M2. The extended monetary model is estimated by the panel quantile regression of Machado and Santos Silva (2019) and Pesaran (2006) common correlated effects within linear and nonlinear panel ARDL frameworks. The estimates illustrate the significant effects of EPUs on developed and developing economies. The ARDL models show that the impact of EPUs is mostly a long-run phenomenon. The Wald test statistics confirm asymmetric effects of EPUs at different quantiles. Moreover, the Wald statistics also support the asymmetric effects of increasing and decreasing EPUs. Overall, domestic, and foreign economic uncertainties significantly affect developed and developing economies’ exchange rates, at least in the long run. Therefore, economic uncertainty should be considered in determining the exchange rate. This extended model might be more appropriate in the post-Covid-19 era.

Do Monetary Models Really Matter to Determine the Exchange Rate Behavior: A Case for Pakistan

This study attempts to investigate whether monetary models of exchange rates are contributing at the same pace to determine the exchange rates across countries, or whether their role has been changed through the development process. Since the ‘money demand’ and ‘purchasing power parity are two major elements of these models suggesting a linear association of monetary models with exchange rate fundamentals, therefore, to capture the expected long-run relationship across these models is assessed by applying the cointegration technique. Three main currencies based exchange rates of Pakistan are evaluated within the context of monetary models including the US dollar, Euro, and Chinese Yuan. A sample of monthly data for the period 1957 to 2020 has been analyzed. The results show a weak long run relationship in the case of the Chinese Yuan-based exchange rate; however, in the short-run monetary models are significantly contributing to determining the real (nominal) exchange rate in the case of all three based currencies. Whereas in the case of both Euro and US dollar-based exchange rates the relationship is strongly evident both in the long and short runs. Chinese Yuan appears to be preferred over both US Dollar and Euro for international payments and a major share in foreign exchange reserves.

Measurement of Forest Ecological Benefits Based on Big Data

Socioeconomic development combined with the development and utilization of forest resources have resulted in the forest ecological environment becoming more and more valuable, and its impact on the national economy has also increased. Firstly, based on a modern statistical model, the dependent variable and independent variable set of standardized forest ecological benefits were determined, and the seemingly unrelated forest ecological benefit model was established. According to the alternative market method and market approximation theory, the first and second monetary models of forest ecological benefit value were constructed using the market approximation coefficient, the effective area coefficient, and the physical quantity conversion coefficient. Next, the concept of “whole diffusion” was introduced into the establishment of the forest ecological benefit model, and the whole diffusion model was established to estimate the physical amount of forest ecological benefits. The concepts of classical forest ecological benefit and generalized forest ecological benefit were proposed. Forest management survey data were used to measure forest ecological benefit, and classic ecological benefit and generalized forest benefit were integrated into one system for the first time. The economic value is 94.31 million RMB ¥.

A Theory-Consistent CVAR Scenario for a Monetary Model with Forward-Looking Expectations

A theory-consistent CVAR scenario describes a set of testable regularities capturing basic assumptions of the theoretical model. Using this concept, the paper considers a standard model for exchange rate determination with forward-looking expectations and shows that all assumptions about the model’s shock structure and steady-state behavior can be formulated as testable hypotheses on common stochastic trends and cointegration. The basic stationarity assumptions of the monetary model failed to obtain empirical support. They were too restrictive to explain the observed long persistent swings in the real exchange rate, the real interest rates, and the inflation and interest rate differentials.

A Framework for the Assessment of Fiscal Consequences of Global Trade Wars

The article is devoted to topical issues of assessing the consequences of trade wars for the fiscal space of third countries. The main preconditions and causes of the trade conflict between the United States and China were studied. The main models for assessing the consequences of global trade wars were analyzed. Particular attention is paid to the global integrated monetary, fiscal and global trade models, which are based on the principles of general economic equilibrium and are widely used to assess the economic consequences of global challenges, including trade wars. It was found that the global integrated monetary and fiscal model, other macroeconomic models were aimed at determining the economic consequences and effects and cannot be directly used to assess fiscal risks and likely budget losses due to global trade wars. The aim of the article is to deepen the principles of assessing the fiscal consequences of trade wars in the conditions of uncertainty in foreign economic policy and directions of restructuring of the world value chains. The economic consequences of the conflict and the channels of their spread to third countries were identified taking into account the deepening globalization processes. The direct and indirect dependence of exports and imports, GDP, investments, factor productivity level and tax revenues on changes in foreign trade, tariff increases, increasing uncertainty in world trade in the short, medium and long term is highlighted. The estimates obtained by different models are summarized. The fiscal consequences of the trade conflict between the United States and China for Ukraine as a country with a small, open and predominantly commodity economy were quantified. The inclusion in fiscal risks of probable losses of foreign trade from global trade wars, arising due to various reasons, which may decrease the tax revenues or increase the expenditures on the public support of enterprises, is justified. Changes in the methodology for assessment of fiscal risks are proposed, enabling to estimate the cost impact of fiscal risks on the public budget of Ukraine. Proposals for improvements in the statistical monitoring of business activity of enterprises, to form an appropriate information base for monitoring foreign economic activities, assessing fiscal risks and making decisions to ensure the sustainability of public finance and public support for enterprises in the conditions of global trade wars, are substantiated.

Electric vehicle user classification and value discovery based on charging big data

With the rapid development of electric vehicles (EVs) in recent years, it is important to understand the varied EV users for EV sector business innovation. Therefore, identifying different types of EV users and implementing differentiated marketing strategies can assist charging service enterprises in improving profitability and user loyalty. Recency, frequency and monetary (RFM) model is an important data mining method that has important practical applications in customer relationship management and direct marketing fields. To classify EV users, an integrated approach incorporating an extended RFM model, a two-stage clustering method, and the Entropy Weight Method is proposed in this study. Analysis results demonstrate that 7426 EV users are divided into six groups, namely “high value users”, “key users to maintain”, “key users to develop”, “potential users”, “new users” and “lost users”. To estimate the performances of the proposed approach, the traditional cluster algorithm and fuzzy c-means method are compared with the improved entropy-cluster algorithm by using the intraclass method. The results indicate that the proposed approach is more robust than other methods. Finally, we develop related marketing strategies for each group of EV users to assist charging service enterprises in improving their marketing effectiveness and financial performance.

Is Geopolitical Turmoil Driving Petroleum Prices and Financial Liquidity Relationship? Wavelet-Based Evidence from Middle-East

ABSTRACT The Iran-Saudi Arabia conflict is an ongoing struggle for influence in the region that has created uncertainty, affected oil prices and regional economics. This paper uses wavelet analysis to examine the frequency and time-varying co-movement and casual nexus between petroleum prices (OP) and financial liquidness (MS) with and without geopolitical risk (GPR). The aim is to test the validity of the monetary equilibrium model from 1988 to 2019. The model is supported by the findings, as both short and medium-term association is found between OP and MS at high frequencies in the presence of GPR. We find a medium-term association between OP and MS in the absence of GPR. The paper’s overall conclusion suggests that GPR affects OP and OP, in turn, impact MS. Diversifying economic activities to minimize oil dependency, which is sensitive to external shocks, is suggested as a mitigation solution.