Monetary Policy Indicators Research Articles

Monetary Policy and Its Impact on Income Distribution in Iraq for the Period 2003-2022

The problem of inequality in the distribution of income is one of the important economic variables that have been focused on in economic studies and research, and the study and analysis of the impact of economic variables in the redistribution of income is of great importance, whether in developed or developing economies, as justice in income redistribution can have important economic effects. This study goes to estimate the impact of some monetary indicators on income distribution in Iraq for the period 2003-2022, where this impact was estimated using the Joint integration according to the self-regression model of distributed slowdown (ARDL) and bound test the results of the test confirmed the existence of a significant impact of the monetary policy indicators represented by the exchange rate, the broad money supply and the interest rate in the redistribution of income in Iraq.

Nonseparability of credit card services within Divisia monetary aggregates

Abstract We use the New Keynesian Dynamic Stochastic General Equilibrium (DSGE) framework and Vector Autoregressive (VAR) to investigate the usefulness and relevancy of monetary services, augmented to include credit card transaction services. We use the new credit-card-augmented Divisia monetary aggregates in the models to further the existing research on their usefulness and relevancy. In this research, we compare three different monetary aggregates within the New Keynesian framework: (1) the aggregation-theoretic “true” monetary aggregate, (2) the credit-card-augmented Divisia monetary aggregate, and (3) the simple sum monetary aggregate. We acquire the following primary results. (1) The credit-card-augmented Divisia monetary aggregate tracks the theoretical (true) monetary aggregate, while simple sum does not. Although this result would be expected from the theory in classical economic models, the result is not an immediate implication of the theory in New Keynesian models and therefore needs empirical confirmation. (2) Under the recursive VAR framework, the credit-card-augmented Divisia monetary aggregate serves as a preferable monetary policy indicator compared to the traditional federal funds rate. (3) On theoretical grounds, we find that the separability condition for existence of a monetary aggregator function could fail, if credit card deferred payment services were excluded from the monetary services block, unless all markets are perfect.

Recent Developments in Indian Central Banking: Flying through Turbulence but Aided by Some Tailwinds

This paper, an extension of our earlier work, presents a narrative of select broad aspects of Indian central banking during the pandemic and thereafter. As elsewhere, Indian monetary policy during the pandemic was characterized by substantial monetary expansion both in terms of rate cuts as well as asset purchase programs. The inflation targeting regime of Indian monetary policy was put to severe stress following the spurt in inflation after the pandemic. Besides, there have been two positive developments in Indian central banking. First, there has been significant improvement in the balance sheets of the Indian banking sector, following the institution of an effective corporate bankruptcy regime, write‐offs of earlier stressed assets, and recapitalization of public sector banks by the government. Second, India has made substantial progress in terms of adopting various facets of its digital financial infrastructure, where public initiatives were accompanied by private sector innovations. The digitalization of payments increased in both quantum and value and has touched the lives of the public through the ease of making daily payments, including the smallest of transactions.

Monetary Policy Decisions’ Impacts on Bank Leverage and Liquidity Ratios in Türkiye

This study explores how banks in the Turkish banking system design their asset and equity structures in return for monetary policy changes. In this context, between the periods of 2010-2020, we estimate bank leverage and liquidity with multiple monetary policy indicators and by employing two econometric models of static and dynamic panels. According to the results, banks reply to monetary expansion by picking up their leverage ratios on the liability part. On the other hand, banks reply to monetary expansion by enhancing their liquidity positions on the asset part. Also, the originality of our empirical study comes from that; this is the first attempt to evaluate the effects of monetary policy changes simultaneously on both sides of bank balance sheets’ in Türkiye.

The role of some monetary and financial policy indicators in developing gross domestic product growth: An analytical and measurement study in Iraq

We aim to show the basic features of monetary variables and the nature of the work of monetary policy instruments, and to try to keep pace with the changes that accompanied the action of this policy for the period between 2000–2022. We find that economic stagnation negatively affects economic growth, with increasing bottlenecks affecting the economy in the short term in Iraq. However, elucidating the fundamental characteristics of monetary variables and functioning of monetary policy indicators, such as the money supply, exchange rate, and interest rate, remains a complex task. We used the standard and analytical approach for the results established for monetary policy, the general framework, and analysis of tools, gross domestic product, economic growth, and the impact of monetary policy on economic activity in Iraq for the highest, medium, and low. Through the research, results, the independent variables have a positive effect on the dependent variable that is, increasing the gross domestic product (GDP) for a previous period by one-unit leads to an increase in the gross domestic product (GDP). According to these data, the study presented the necessity of working with monetary policy in Iraq in a way that increases the growth of the gross domestic product. Therefore, it is necessary for monetary policy to work to control the monetary mass by achieving a balanced proportion between the monetary mass and the gross domestic product in order to reach balance between real and cash.

The Impact of Monetary Policy and Macroeconomic Indicators on the Current Account in Developing ASEAN

The current account balance is a component of the balance of payments, in which a surplus or deficit is a form of a country’s external balance or imbalance. Since the 2008 financial crisis and the COVID-19 pandemic, several countries, especially developing countries, have experienced external imbalances, which is related to a continuous pattern of transactions with the rest of the world. Developing countries in the ASEAN region are often vulnerable to experiencing external imbalances which are reflected in their current account balance, which every year the country continues to fluctuate and tends to decrease until it experiences a current account deficit. This research was conducted to analyze the impact of monetary policy and macroeconomic indicators on the current account situation of developing countries in the ASEAN region during the 15 year period of 2007–2021. The Current Account Balance as the dependent variable and the independent variable uses Interest Rates in explaining monetary policy and macroeconomic variables including Exchange Rate, Inflation, Gross Domestic Product, Foreign Direct Investment, and Trade Openness. This study analyzes long-term and short-term effects using the VECM panel model. The results show that Interest Rates in the short term has no effect, but in the longer term has a significant negative effect. The Exchange Rate in the short term and long term have a significant positive effect. Inflation and GDP have no effect in the short term but have a significant negative effect in the long term. FDI has a significant positive effect in the short term and the long term. And finally, Trade Openness in the short term has a significant positive and in the long term has a significant negative effect. Keywords: current account balance, interest rate, macroeconomic, VECM panel

Macroeconomic impacts of monetary and fiscal policy in the euro area in times of shifting policies: A SVAR approach

This paper analyses the impacts of monetary and fiscal policy of the euro area on output and inflation between 2005 and 2022 using a structural vector autoregressive (SVAR) approach. We employ three alternative indicators of monetary policy, alongside government spending and revenue as fiscal variables to estimate the effects across different subperiods. The findings reveal that monetary policy tightening produces a negative and delayed effect on both output and inflation, with the effects differing across alternative monetary policy indicators in terms of duration and magnitude. A fiscal revenue shock is found to be inflationary, whereas a fiscal spending shock initially has a negative effect on growth that later turns positive, but is short-lived. The effects of fiscal policy shocks are more substantial than the effects of monetary policy shocks. The results also suggest that the effects may differ across subperiods, depending on the nature and intensity of the policy shifts.

Impact of Monetary Policy on the Profitability of Nepalese Commercial Banks

This study examines the impact of monetary policy instruments on firm profitability in Nepalese commercial banks from 2007/08 to 2021/22. The research investigates the relationship between profitability and various monetary policy instruments, including broad money supply, statutory liquidity ratio, bank rate, investment in treasury bills, and cash reserve ratio. The analysis reveals diverse return on investment (ROI) trends across banks, with NIMBL initially showing high ROI followed by a drop, SBL and SBI displaying substantial increases, and NABIL and HBL maintaining stable ROI. Net Interest Margin (NIM) analysis shows varying profitability, while monetary policy indicators exhibit diverse and occasionally fluctuating values, influencing borrowing costs and liquidity. Correlation analysis identifies positive associations between NIM, M2, and ROI and negative correlations with TBR and CRR. Regression analysis emphasizes the significance of CRR, IRS, and M2 in impacting ROI. The study concludes that the cash reserve ratio, bank rate, and investment in treasury bills affect Nepalese commercial banks' profitability. Recommendations include managing the cash reserve ratio, maintaining low bank rates, encouraging treasury bill investment, and minimizing the statutory liquidity ratio to enhance profitability. Implications suggest that effective management of monetary policy instruments can improve banks' profitability. Future research could explore additional profitability indicators, expand the sample size and observation years, include other financial institutions, and employ a mixed-method approach for a comprehensive understanding of the impact of monetary policy instruments on bank profitability.

An Evaluation of Monetary Policy in India: A SVAR Approach

This paper sets an examination for the strength of the monetary policy transmission variables in India for the period 2000 to 2019 on the monthly basis. The variables incorporated in the model are Gross Domestic Product, Bank Rate, Wholesale Price Index and Exchange rate. The techniques of Structural Vector Autoregressive Model (SVAR) have been applied to perceive the clear picture of the contemporaneous relationship among the variables, thus providing with the relative importance and strength of each variable within the model. In the first place, all the variables were instituted to be statistically significant. At the same time, WPI and GDP are found to be more prominent, while exchange rate demanding a pivotal change in the working of the banking sector.

Monetary Policy in India and the U.S.: Is the Taylor Rule Irrelevant?

Monetary Policy in India and the U.S.: Is the Taylor Rule Irrelevant?

What drives bank liquidity creation? The interaction of monetary policy and strategic scope

The research investigates how the marginal influence of monetary policy on the expansion of liquidity creation changes depending on the strategic scope of banks. Through a sample of Vietnamese commercial banks between 2007 and 2019, we estimate measures of liquidity creation that consider all banking items and build up various monetary policy indicators. Empirical regressions are achieved with the dynamic generalized method of moments (GMM) estimator that is fitted to tackle the endogeneity issue. The study confirms the existence of the bank liquidity creation channel, i.e., an easing monetary policy boosts the banks' liquidity creation ability, both when the central bank reduces interest rates and injects more capital into the market. For banks with a strategic scope that relies more on non-interest revenues or diversifies more into various banking segments, the relationship between monetary policy and the generation of bank liquidity is strengthened when the central bank adjusts interest rates but mitigated if it changes the money supply using quantitative-based monetary tools. This paper expands the literature stream on monetary policy's liquidity creation channel, which is essential to the economy but has been little explored, by shedding light on the moderating role of bank income. Additionally, this study employs many policy indicators based on interest- and non-interest-rate tools to avoid misleading conclusions on the policy stance.

Assessing Monetary Policy Effects on Capital Markets: Evidence from the Euro Area

The focus of the paper is the influence the European Central Bank’s monetary policy has on the European capital market. The aim of this research is to investigate the relationship between monetary policy indicators and different segments of the capital market in the Euro area, particularly government, corporate bond and stock markets. We have used a standard structural vector autoregressive (SVAR) modelling methodology based on monthly dataset to evaluate the interrelations between observed six European variables. Impulse response functions and variance decomposition analysis have contributed to the model interpretation. Based on our estimations, we can conclude that each of the observed sectors of the European capital market is interrelated with ECB monetary indicators. The interest rate positive impulses’ impact on bond and stock markets’ volatility evolved mainly within a short period of time. Government, corporate and stock markets, in general, reacted positively to tight monetary policy, although each segment had its own behaviour throughout projection horizon. The outcome of variance decomposition analysis revealed that the fluctuations of the variables could more widely be explained by the shocks directed to themselves.

Measuring and analyzing the impact of some monetary policy indicators on the trading volume of the Iraq stock exchange for the period 2004-2023

Measuring and analyzing the impact of some monetary policy indicators on the trading volume of the Iraq stock exchange for the period 2004-2023

Прогноз мировых цен нефти на основе монетарной политики Соединённых Штатов Америки

This study explores the critical realm of forecasting oil prices within the global energy resources market. The research is particularly timely as it provides new insights into the future growth prospects of Brent crude oil prices, which are increasingly influenced by the indicators of the monetary policy set forth by the USA Federal Reserve. The primary objective of this scientific endeavor is to predict Brent crude oil prices in response to shifts in the indicators of the US Federal Reserve's monetary policy. To fulfill this objective, the study systematically tackled several key tasks. These tasks encompassed a thorough examination of the theoretical foundations underpinning oil price forecasting, the meticulous compilation of statistical data related to the target indicators, and the application of specialized economic methodologies. Mul[1]tiple linear regression equations were formulated to establish the relationship be[1]tween Brent crude oil prices and the indicators of the US Federal Reserve's monetary policy. Furthermore, the study ventured into the prediction of these Federal Reserve indicators and arrived at substantive conclusions. The research methodology employed a range of general and specialized scientific techniques, encompassing analysis, synthesis, and statistical analysis. Notably, the scientific innovation of this study lies in the construction of multiple linear regres[1]sion equations to forecast Brent crude oil prices, hinging on key indicators of the USA Federal Reserve's monetary policy, including the effective federal funds rate, the M2 monetary aggregate, the US dollar index, the core personal consumption expenditure price index, and the US unemployment rate. Additionally, this study cal[1]culated an increasing trend equation for the M2 monetary aggregate in the United States. The practical implications of this research are profound, offering valuable insights for investors looking to craft effective trading strategies within the global energy resources market.

Evaluating the Efficacy of Monetary Policy in Driving Economic Growth in Turkey

This paper examines the efficacy of monetary policy in fostering output growth in Turkey by analyzing annual time-series data sourced from the Central Bank of the Republic of Turkey (CBRT) spanning from 2005 to 2023. The research employs the Autoregressive Distributed Lag (ARDL) bounds testing procedure. The findings reveal that money supply, considered an indicator of monetary policy in the context of this study, exerts a positive and statistically significant influence on output growth in Turkey in both the short and long term. Additionally, government expenditure has a positive and statistically significant impact on growth in the long term, albeit weaker than the impact of money supply. Lastly, in the long term, inflation negatively affects growth, with statistical significance observed at the 10% level.

Determinants of Monetary Policy: An Application of Regime Switching Model

The monetary policy of India has undergone substantial changes since 2013, particularly after taper tantrum episodes. The RBI moved from WPI to CPI for measuring inflation. Monetary policy anchoring shifted from a multiple-indicator approach (MIA) to flexible inflation targeting (FIT) in 2016 to deal with the aftermath of the global financial crisis. In this context, the study examined whether there was a significant shift in the monetary policy regime using a non-linear model (Markov Switching-Vector Autoregression Model) covering monthly data from 2013 to 2020. The study also investigated the role of the inflation rate, oil price, growth rate, and exchange rate in influencing monetary policy in India. The study found no change in the RBI monetary policy regime, and monetary policy remained biased towards controlling the inflation rate.

Transaksi Uang Elektronik: Dampaknya terhadap Efektivitas Kebijakan Moneter Indonesia

As a new payment instrument, electronic money usage is increasing yearly. This can be seen from the increasing volume and nominal transactions. This study aims to see whether electronic money transactions affect the effectiveness of monetary policy in Indonesia, as seen from economic growth, inflation, interest rates, and money supply. The analytical method used is the Vector Autoregression/ Vector Error Correction Model (VAR/ VECM), using secondary time series data sourced from the Central Bureau of Statistics and Bank Indonesia, observation period 2010M1 to 2021M12. The results show that there is a long-term relationship between the electronic money variable and the monetary policy variable in the VAR model, so the model shifted to VECM. Second, this study finds that an increase in the volume of electronic money transactions positively affects the effectiveness of monetary policy in the long run. Meanwhile, in the long run, an increase in the nominal of electronic money transactions has a varying impact on monetary policy indicators.

Studying Differing Impacts of Various Monetary Aggregates on the Real Economy

Since we are living in a time of multiple crises and geopolitical unrest, it is important to look at how monetary aggregates affect the real economy. This will help us figure out how uncertainty affects the economy and come up with more stable financial and monetary policy measures, especially for EU member states that are not in the euro area. This study aims to determine a dynamic structured monetary policy model, using information from the literature and the study of the evolution of financial elements of macroeconomic aggregates in a non-euro area Member State (Romania). The methods consist of an empirical study of causality in the monetary aggregates in the literature and an analytical approach to the consolidation of dynamic databases over a period of 16 years (2007–2022) and its statistical modeling. This research will examine the impact of uncertainty on Romania’s monetary policy over the period and how this uncertainty alters the dependence relationships between monetary policy indicators and derivatives of the GDP deflator. The results of the two-step modeling, respectively, for the periods 2007–2019 and 2007–2022, will highlight via a comparison the vulnerabilities induced by periods of uncertainty and pandemics on the evolution of monetary policy indicators and will be useful to financial decision makers in correcting monetary policy elements based on the vulnerability picture instrumented as a result of analysis and modeling. The novelty of this study lies in the multidisciplinary and dynamic approach to the evolution of monetary policy indicators and the construction of the dynamic structured model, which is a useful tool for assessing the vulnerability status of a EU Member State economy outside the euro area under uncertainty.

The monetary policy pass-through mechanism: Is the search-for-yield incentive at work?

The paper investigates the possible mechanism behind the link between monetary policy and bank lending/risk-taking behaviors. Using a sample of Vietnamese commercial banks during 2007–2019, we find that the impact on bank output associated with monetary policy shocks is attributable to banks’ incentives to search for yield. Concretely, if interest rates remain lower amid monetary expansions, banks are likely to expand their lending activities more aggressively and take more risks to offset their reduced revenues. Moreover, this crucial supply-side effect is also at work for the bank liquidity creation channel of monetary policy transmission. Accordingly, we document that demotivated banks appear to undermine the impact of monetary policy on the core function of banks in creating liquidity to the real economy. Our finding is robust against a series of alternative monetary policy indicators, different bank output measures, multiple search-for-yield proxies, and substitute econometric methodologies. In sum, as the monetary policy pass-through transmission through the key banking channels is found due to banks’ own decisions, monetary authorities need to take this underlying mechanism into account when setting their monetary policy.

The Effects of Monetary Policy on the Contributions of Banks’ Lending to Economic Performance in Nigeria

Monetary policy typically focused on economic performance, price stability, and external balance (Balance of Payments Equilibrium), among other things. The study's goal is to look at how banks contribute to Nigeria's economic performance through lending. The study used an econometric method to examine the impacts of monetary policy on bank lending contributions to economic performance, using Augmented Dickey Fuller (ADF), unit root test, and regression analysis as estimation techniques. Broad money supply, monetary policy rate, prime lending rate, and inflation rate were used as monetary policy indicators, whereas real gross domestic product was used as an economic performance metric. The information utilized came from the Nigerian Central Bank's Statistical Bulletin and the National Bureau of Statistics. Statistical evidence from the result regression outcome revealed that banks’ lending, money supply, monetary policy rate have positive contributions to economic performance in Nigeria while inflation rate contributed positively but insignificant to economic performance in Nigeria during the studied period. The result findings further strengthen and accommodate more investment and lucrative projects into the economy which on the long run will provide job creation, reduce unemployment, reduce poverty level and contribute to the economic development of Nigeria if put onto use. The study therefore concluded that monetary policy has positive contributions to banks’ lending towards Nigeria economic performance. It was recommended that the CBN needs to supervise thoroughly the banks’ activities to enable them comply with all the legal regulatory frameworks and monetary policies. Not that alone, the design of monetary policy and its implementation should be made in such a way that the conflict of target is avoided.