Money Growth Research Articles

Financial behavior between male and female: a systematic literature review

Finance is an essential aspect of existence. Handling it is reflected in one’s financial behavior. Poor financial decisions have consequences, therefore it's critical for people of both genders, men and women, to be financially informed in making financial decisions. A synthesis of the differences in financial behavior between men and women is the aim of this systematic literature review. Twenty-seven papers (27) published papers between 2014 and 2024 were extracted from the database using the Preferred Reporting Items for Systematic Review (PRISMA) framework. The findings showed that, in comparison to women, men are more financially knowledgeable; they have a greater risk appetite than women, which allows then to take advantage of financial products and services. Contrarily, females with their risk aversion attitude, leaves them financially susceptible because it prevents them from taking advantage of financial products and services like optimizing the potential for money growth. In terms of spending, women are more conservative, and are price sensitive than men. The findings also indicates that women are more vulnerable to financial misconduct; yet, financial literacy will mitigate this risk. Therefore, programs for gender-sensitive financial education should be taken into consideration to close the gap in financial literacy and give women more power in making financial decisions. With this, it would promote financial inclusion and aid in the realization of Sustainable Development Goals (SDG) 5 and 10 or Gender Equality and Reduce inequalities respectively. Future studies may focus on how financial technology affects gendered financial behavior to promote more equal economic outcomes.

Linkage of Money Growth on Inflation and Economic Growth - Evidence from Indonesia

AbstractThis study is about money growth, and its linkage on inflation and economic growth. It was found that money growth in the previous period affected by 0.1539 on changing of economic growth, inflation affected by -0.2637 on economic growth, and money growth affected changing of inflation by 1.0468. Money growth is a source of economic growth but it will then induce economic shocks stemming from inflation, then money growth must refer to normal growth. It was found that normal money growth is 16.7631%. Because deviation of money growth in a certain period from its normal growth will affect inflation and economic growth, money growth must be controlled by a small deviation from its normal growth. This method on determining normal money growth can be used as reference to Bank Indonesia in determining economic growth and inflation, and to commercial banks in determining interest rates. Keywords:Economic Growth, Inflation, Money Growth, Normal Growth of Money

Using the balance sheet framework for monetary analysis: The case of China

AbstractMonetary analysis has been out of fashion lately. However recent economic and inflation dynamics call for renewed attention. Since 2021, broad money growth has been associated with high inflation and overheated production. Central banks and academia should pay more attention to monetary analysis to understand the economic dynamics and formulate better monetary policy. This article briefly reviews the monetary analysis practices of major central banks and then focuses on China as a case study. We set out the features of the balance sheet of depository corporations, and use it as a basic framework for monetary analysis. There are seven money‐supply channels of broad money, which fluctuate because of seasonality, demand conditions, regulation, and financial institutions micro‐managing indicators. Any change of broad money will be reflected through the balance sheet. Applications include analysing long‐term evolution of money supply channels, analysing and predicting monetary growth, recording major financial incidents, and so forth.

Money growth and inflation rate: evidence from Angola from 2014 to 2023

Money growth and inflation rate: evidence from Angola from 2014 to 2023

Mobile Money Adoption in Uganda

Mobile money has gained a lot of acceptance in the Ugandan financial sector since its inception a decade ago. This is due to high mobile phone usage, especially in rural areas where branch banking is rare. The financial sector’s adoption of mobile money has enhanced financial inclusion by providing banking services to individuals previously excluded from the financial sector. Mobile money services offer a variety of financial transactions, including payment, saving, credit, and insurance, without the need to visit a banking hall. These are poverty reduction, job creation, GDP, and the development of a sound financial sector. However, despite the increased use and growth of mobile money in Uganda, it has presented the following challenges: Some of the problems undermining the future of this innovation include regulatory barriers, cybersecurity threats, compatibility questions, and consumer scepticism about digital financial services. Solving these challenges calls for cooperation between mobile money operators, regulators, policymakers, and other interested parties to foster innovation, competition, and consumer protection while enhancing the access and usage of financial services and products. This review examines mobile money adoption in Uganda. We used available data from many reputable databases, spanning the time period from 2010 to 2024. Findings suggest that in the future, mobile money in Uganda has bright prospects in terms of future trends, new uses, and improved connections with other electronic systems. New technologies like biometric identification, artificial intelligence, machine learning, and blockchain will enhance security, user experience, and other conditions that are necessary to fulfil user needs. Communication with mobile money providers, regulators, and stakeholders is a necessary step to fully benefit from these opportunities and manage the remaining challenges. Lastly, measures such as the promotion of consumer protection, availability of financial products and services, investment in technology, and constant public sensitization would go a long way towards tapping the full potential of mobile money in Uganda, as this fuels positive social and economic change in the country. Keywords: mobile money, Uganda, financial sector, cybersecurity, Gross Domestic Product (GDP)

Money growth and inflation in the Euro Area, UK, and USA: measurement issues and recent results

Abstract This paper identifies several ways in which “measurement matters” in detecting quantity-theoretic linkages between money growth and inflation in recent data from the Euro Area, United Kingdom, and USA. Elaborating on the “Barnett critique,” it uses Divisia aggregates in place of their simple-sum counterparts to gauge the effects that monetary expansion or contraction is having on inflationary pressures. It also uses one-sided time series filtering techniques to track, in real time, slowly shifting trends in velocity and real economic growth that would otherwise weaken the statistical money growth-inflation relationship. Finally, it documents how measures of inflation based on GDP were distorted severely, especially in the EA and UK, during the 2020 economic closures. Using measures based on consumption instead, estimates from the P-star model confirm that changes in money growth have strong predictive power for subsequent movements in inflation.

Linkage of Money Growth on Banks Credit – Evidence from Indonesia

Linkage of Money Growth on Banks Credit – Evidence from Indonesia

Unanticipated Money Growth and Unemployment in the Philippines

The Philippines has had high levels of unemployment for years. During the 2000s, the unemployment rate hovered between seven and ten percent.  High unemployment can have adverse effects on individuals and society. The question that this paper analyses is how unanticipated money growth affect the unemployment situation in the Philippines. There has been literature on the relationship between unanticipated growth on the money supply and unemployment. The paper proposes that only unanticipated money movements will affect real economic variables like unemployment and the output level. In order to test our hypothesis, it is important that we need to quantify the concepts of anticipated and unanticipated money movements. This paper uses time-series data on several economic variables as well as a model based on Geetha et al. (2023). Using an error-correction model, the results show that an unanticipated increase in M2 money is a factor that contributes to unemployment in Philippines.

The nexus among digital financial inclusion, monetary policy transmission, and economic development in Sub-Saharan Africa

This paper aims to examine the complex relationship between digital financial inclusion, monetary policy transmission, and economic development in 18 Sub-Saharan African countries from 2004 to 2021. The study utilizes panel data and employs a digital financial inclusion index, broad money growth, and real gross domestic product per capita as proxies for digital financial inclusion, monetary policy transmission, and economic development, respectively. The panel autoregressive distributed lag model results uncover a bi-directional causality between economic development and digital financial inclusion, emphasizing the pivotal role of digital financial inclusion in fostering economic development. Additionally, another bi-directional causality between digital financial inclusion and monetary policy transmission highlights their interdependence. Unidirectional causality from monetary policy transmission to economic development is also established. This study emphasizes the crucial role of robust measures in enhancing digital financial inclusion to avert adverse consequences, offers nuanced insights into policy dynamics, particularly regarding inflation mitigation, and enhances monetary policy effectiveness. These findings underscore the importance of policy reform, legislation, and regulatory improvements to promote digital financial inclusion by Sub-Saharan African central banks. Strengthening rural financial infrastructure is crucial for driving digital financial inclusion, sustainable economic development, and reducing regional inequalities.

Differential impact of money growth on inflationary outcomes: evidence from emerging markets using panel NARDL approach

Differential impact of money growth on inflationary outcomes: evidence from emerging markets using panel NARDL approach

Drivers of inflationary shocks and spillovers between Europe and the United States

This paper builds a structural econometric model to measure the impact on inflation of three shocks: a shock of disequilibrium in the energy markets, a money growth shock, and a global stochastic shock, which covers factors such as inflationary expectations and uncertainty. It is found that for the economies of Europe and the United States, the current inflationary period is dominated by the global component closely followed by energy markets in the short term and by monetary growth in the medium term. The dynamics of the model further show that the recent exponential inflationary surge of 2021 onward is mainly headed by other factors rather than energy markets or money growth, such as expectations or uncertainty. Further analysis of the spillover effects between the inflation of Europe and the United States based on endogeneity-robust econometric estimations shows that this relationship is unidirectional from the USA to Europe. In essence, this work shows that a coordinated strategy between fiscal and monetary policies is the best response to recent inflationary shocks.

Making the Ethiopian Banking System Ready for Green Growth and Development

ABSTRACT After two decades of high economic growth and fast development progress, Ethiopia is facing significant macroeconomic challenges such as high inflation, foreign exchange shortage, and slowing growth. At the same time, it is imperative to bring the economy on a green and climate-resilient development path. In this context, the financial sector has an essential role to play. International financial institutions recommend reducing the fiscal deficit to dampen money growth and inflation and giving up exchange rate control. Based on an alternative analysis of inflation, this article argues that money supply restrictions and fiscal austerity may not only prove ineffective in addressing inflation while incurring high economic costs, but also impede a response that comes via productive and green investment to ease the economy’s supply-side constraints and to lower inflation. Rather than fixating on the quantity of money and market exchange rates, central banking should focus on the direction of financial flows to make sure they go into real green investment rather than speculative and inflation-driving investment. This policy blueprint will also reduce balance-of-payments problems and improve both internal and external monetary stability.

Investigating the impact of FDI on regional economic misery – A nonlinear panel data analysis

The present study uses fixed effect models, random effect models, and the System Generalized Method of Moments technique for the period 2002–2021 to analyze the drivers of economic misery in six distinct regions around the world with a total of 198 nations. The objective of this study is to analyze the factors contributing to economic misery, specifically, the impact of political stability, broad money growth, imports relative to exports, foreign direct investment, and gross national expenditure. The estimated result demonstrates that the causes of economic misery vary in nature across different regions of the world. Political stability lessened economic misery across all six regions. In four regions, broad money growth has decreased economic misery. The imports relative to exports had decreased economic misery in five regions. In all six regions, the level of economic misery grew with gross national expenditure. FDI inflow decreased economic misery in four regions, although the relationship between FDI and economic misery is found to be nonlinear. Policymakers need to take into account the particular connection between economic misery and FDI because this relationship can have a different nature depending on the particular region. Moreover, they should understand the main factors contributing to economic misery in their particular region so that they can make an effective policy mechanism.

Stock price index analysis of four OPEC members: a Bayesian approach

This study examines the relationship between macroeconomic variables and stock price indices of four prominent OPEC oil-exporting members. Bayesian model averaging (BMA) and regularized linear regression (RLR) are employed to address uncertainties arising from different estimation models and variable selection. Jointness is utilized to determine the nature of relationships among variable pairs. The case study spans macroeconomic variables and stock prices from 1996 to 2018. BMA findings reveal a strong positive association between stock price indices and both consumer price index (CPI) and broad money growth in each analyzed OPEC country. Additionally, the study suggests a weak negative correlation between OPEC oil prices and the stock price index. RLR results align with BMA analysis, offering insights valuable for policymakers and international wealth managers.

Exploring the Correlation Between Monetary Policy and Food Inflation in Zambia

his relationship isolating food inflation from overall inflation to provide better policy implications that can enhance welfare for the Zambian populace. The Autoregressive Distributed Lag Model and the Error Correction Model were employed for the short run and long run analysis respectively. The findings postulate that there exists a significant relationship between monetary policy and food inflation. The monetary policy rate and the growth in the broad money have a destabilising relationship with food inflation. The depreciation in the domestic currency to foreign currency increase food inflation in the long run. Whereas the exchange rate channel plays a role of greater significance amongst the studied monetary policy tools. Inflation targeting, although significant, adds inflationary pressure of domestic food inflation, highlighting the need for stern policies that can individually factor in food inflation.

The lens of the quantity theory of money to disentangle the perceived relationship between money growth and inflation: a PSVAR approach

This paper contributes to the debate on the re-appraisal of monetization mechanism as a possible tool for dealing with macroeconomic imbalances due to close economic shocks (e.g. the Covid pandemic, the Russia-Ukraine conflict and the escalation in Israel-Hamas crisis). We analyze and empirically discuss the well-known Quantity Theory of Money (QTM), by applying the SVAR methodology to a heterogeneous panel including several Countries (Australia, China, India, Japan, United Kingdom and the United States) plus the block of Euro Zone (EZ) over the period 1992–2022. We investigate the dynamics and the impacts of the variables included in the theoretical model (inflation, GDP growth, money growth and the change in the velocity of money) through the analysis of the macro economic datasets retrieved from the OECD and Trading Economics databases. We find that money growth does not exert the decisive spillover effect on the path of inflation (i.e. common shock) throughout our sample. Moreover, our results indicate that the idiosyncratic component does not show a predominant and determining role of monetary growth in inflationary dynamics.

Expectations and the neutrality of interest rates

Our central banks set interest rates, and do not even pretend to control money supplies. How do interest rates affect inflation? We finally have a complete economic theory of inflation under interest rate targets and unconstrained liquidity. Its long-run properties mirror those of monetary theory: Inflation can be stable and determinate under interest rate targets, including a peg, analogous to a k-percent rule.Uncomfortably, stability means that higher interest rates eventually raise inflation, just as higher money growth eventually raises inflation. Sticky prices generate some short-run non-neutrality: Higher nominal interest rates can raise real rates and lower output. A model in which higher nominal interest rates temporarily lower inflation, without a change in fiscal policy, is a harder task. I exhibit one such model, but it paints a more limited picture than standard beliefs. Generically, without a change in fiscal policy, monetary policy can only move inflation from one time to another.The last decade has provided a near-ideal set of natural experiments to distinguish the principal theories of inflation. Inflation did not show spirals or indeterminacies at the long zero bound. The large monetary-fiscal expansion of the covid era produced a temporary spurt of inflation. The same money unleashed in quantitative easing had no such effect.

Central Bank Independence, Inflation and Money Growth: Evidence from South Africa

Purpose: This article evaluates the impact of the de jure independence of the South African Reserve Bank (SARB) on the credibility and discipline of domestic monetary policy. Credibility captures the extent to which economic agents trust the SARB to pursue its price stability mandate and is measured by the relationship between the SARB’s independence and domestic inflation. Discipline relates to the effect of independence on money growth rates, while independence is associated with a more disciplined central bank and moderate money growth rates. Methodology: A simple autoregressive distributed lag (ARDL) econometric specification and Granger causality tests are employed. Following the extant empirical literature, existing indexes of central bank independence (CBI) are regressed on annual rates of inflation and M2 money growth. Findings: A statistically significant negative relationship is established between both i) CBI and inflation and ii) CBI and money growth for the South African economy. This suggests that the SARB’s legal independence plays an important role in containing inflation (credibility) and limiting excessive money growth (discipline). Contribution: This article fills a gap in the extant literature by being the first attempt at formalising the empirical link between de jure CBI, inflation, and the rate of money growth in the South African economy.

Money growth pegging, Taylor rule, status‐seeking behavior and the “spirit of capitalism”

AbstractThis paper analyzes the impact of “spirit of capitalism” on stationary welfare and stability properties of a one‐sector Ramsey economy, where the demand of money is motivated by a cash‐in‐advance constraint on consumption expenditures. Preferences are defined over consumption and capital stock. There is a monetary authority that follows either a money growth pegging rule or an interest rate pegging rule. When a money growth pegging rule is introduced, a unique steady state emerges. A slight desire for status is a sufficient condition for an increase in the money growth rate to exert a local stabilizing effect and to improve stationary welfare. When an interest rate pegging rule is introduced, two steady states may emerge: a “liquidity trap” and an “interior” steady state. Both steady states are locally determinate. Moreover, we show that a slight desire for status is also a sufficient condition to ensure that the stationary welfare at “interior” steady state is higher than the one of the “liquidity trap”. It follows that an increase in the policy rate is, then, an efficient way to exit the “liquidity trap” steady state. Under similar conditions, a higher policy rate increases the stationary welfare at the “interior” steady state.

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.