Positive Money Research Articles

Money value, risk perception and behavior: evidence from the Brazilian market

PurposeThis research sheds light on the distinct decision-making behaviors and perceptions related to the value attributed to money, uncovering nuances in the interrelationship between money valuation and its ensuing influence on risk perceptions and related behaviors, mainly focusing on financial education.Design/methodology/approachExecuted in the Brazilian market, this study employs a quantitative approach, encompassing 663 participants and deploying comprehensive statistical methodologies – principally, structural equation modeling based on variances – to scrutinize the amassed primary data.FindingsThe insights from the study reveal a significant impact of both negative money value (NMV) and positive money value (PMV) on participants' financial decisions, profoundly shaping perceptions, acceptances and responses to risk. Consequently, this study underscores the pivotal role the perceived value of money plays in sculpting financial behaviors and formulating risk management strategies. Distinctly, this research emphasizes intrinsic monetary values, extending unprecedented insights by delineating aversive behaviors toward losses and risks and probing the repercussions of both negative and positive monetary values.Originality/valueIt acts as an avant-garde exploration, unveiling new perspectives on upcoming consumers' anticipated financial decision-making approaches and pinpointing areas warranting deeper exploration and comprehension within the fluid consumer market landscape.

Monetary transmission and government investment in China

The quantity measure of money supply—the M2 growth, in particular—has been used as the intermediate target of monetary policy in China since 2000. We document three findings on the transmission of money supply shocks to firm investment and financing over the period from 1998 to 2016. First, positive money supply shocks have significant negative effects on firm investment and do not have consistent impacts on firm financing, contradicting the standard monetary transmission mechanism. Second, using short-term global capital flows as an exogenous money supply factor, we recover the standard positive effect of money supply shocks on firm investment and financing, suggesting that M2 growth contains confounding factors and it is inappropriate to use it directly as an intermediate target or indicator of monetary policy. Third, we show that removing the government investment-related component from M2 growth leads to a monetary supply measure that conforms to the standard monetary transmission mechanism. Overall, we argue that our refined measure of M2 growth can serve as a superior indicator for the intermediate target of monetary policy in China.

Driving Utah's Rivers: Working Water in the West

Driving Utah's Rivers: Working Water in the West

Money in a “Safe” place: Money anthropomorphism increases saving behavior

Saving has an important impact on consumers’ lives and life satisfaction. However, various indices indicate that consumers do not save enough. This research shows that a simple change in the perception of money by imposing humanlike characteristics (i.e., money anthropomorphism) can significantly increase savings. Specifically, we posit that imbuing money with humanlike characteristics can enhance both saving intention and real saving behavior because humanized money is considered to be capable of experiences such as pain or joy (perception of experiences) and, as a result, is more vulnerable and in need of protection (perception of vulnerability). By inserting money clipart or using first-perception language to describe money, we manipulate money anthropomorphism in six studies. In behavioral studies, we show that these money anthropomorphism manipulations increase real saving behavior by 18%. In addition, several alternative accounts, including warmth perception of money, autonomy toward money, perceived control over money, feeling guilty about spending money, and perceived importance of money, are ruled out. Furthermore, the results show that when the target account to keep money is considered risky, the positive money anthropomorphism on saving disappears. The findings provide important and practical implications for increasing personal savings.

Investigating the Effect of Financial and Monetary Policy on the Iranian Stock Market by Using DSGE Model

This paper uses a dynamic stochastic general equilibrium model to investigate the effect of fiscal and monetary policy on the stock market in Iran. Results show that a positive money shock leads to a rise in output, stock price index, and inflation. In addition, the response of the stock demand to money supply shock is negative. We found that a positive government expenditure shock led to a rise in output and inflation. The response of stock demand and stock price index to the government expenditure shocks are negative. Furthermore, results show that a stock market shock leads to a rise in output and inflation.

Does the exchange rate overshoot in an emerging economy?

PurposeThe sticky-price monetary model of exchange rate states the overshooting hypothesis as, exchange rate depreciation beyond its long-term value in response to an increase in money supply owing to the sticky nature of prices. Because of interest and relevance to policy, there is a huge extant literature on it but with mixed findings that suggest the need for further studies to refine the findings. Pakistan’s rupee exchange rate against the US dollar depreciated 128.44% over the period May 2007–December 2018. Considering this substantial decline in rupee's value, this study aims to examine either the rupee short-run value is over-shot of its long-term value.Design/methodology/approachThis study uses a linear ARDL approach that segregates the short-run and long-run effects thus clarifying the premise of exchange rate overshooting. Furthermore, this study also uses nonlinear ARDL as a robustness check incorporating structural breaks.FindingsFindings based on a linear model show evidence of exchange rate undershooting that means a positive money shock causes the exchange rate to appreciate. A nonlinear analysis also provides support to these findings. However, the increase in relative money supply has more such effect than that of a decrease in the relative money supply. Moreover, the authorities’ inclination to stabilize the exchange rate appreciates its short-run value.Originality/valueThis study substantiates the overshooting hypothesis literature by considering the role of asymmetric effects of exchange rate determinants and structural breaks that is a rare attempt in the extant literature.

In Search of Exchange Rate Undershooting in Pakistan

Exchange rate behaviour does not follow very obvious and predicted pattern. Many attempts have been made to predict its behaviour as much as possible. This research re-examines the Dornbusch’s model of exchange rate overshooting caused by price rigidities. Dornbusch’s assumption of full employment in economy has been violated in this research which creates the possibility of exchange rate undershooting. In response to positive monetary shock, interest rate decreases and exchange rate undershoots its long run equilibrium. This research explains the dynamics of anti-intuitive exchange rate undershooting. Apart from theoretical formations of exchange rate undershooting, this research also analyses Pakistani data for exchange rate undershooting or overshooting in response to increase in money supply. Quarterly data of twenty three years for exchange rate, nominal interest rate, price, real output and money have been taken and vector autoregressive technique has been used. Evidence of exchange rate undershooting in response to positive money supply shock was found. It also gives an important insight into policy making by identifying some probable behaviour of exchange rate.

True Islamic Banking—A New ‎Proposal Based on “The Positive Money ‎Proposal”‎

The Positive Money proposals and the 100% reserve debates, which have almost a century of discussions and research behind them, have now gathered considerable momentum. A cursory perusal of the proposals shows that the features contemplated, with some modifications, may offer a solution for true Islamic banking that is not only free of ribā but one that promotes the objectives of the Sharī‘ah. Further, the final design, after incorporation of the sharī‘ah rules, will satisfy the ribā provisions laid down by the earlier jurists. These provisions are stated in the section below. The section following it will incorporate these provisions into “The Positive Money Proposal.” The excellent proposal, mentioned above, was written by Andrew Jackson, Ben Dyson, and Graham Hodgson, The Positive Money Proposal (2nd April 2013). This proposal as well as other proposals are found on positivemoney.org, along with many videos and other resources.

MONEY SUPPLY AND EXPORTS: A GREATER MEKONG SUBREGION PERSPECTIVE

ABSTRACT This paper investigates causational effect between domestic money supply and exports in the Greater Mekong Subregion (GMS) when trade is extended beyond the subregion. Following the export-led economic growth and gravity trade approach, we adopt a simple Dynamic Stochastic General Equilibrium representation with two rational expectation components, a Taylor rule for interest rate, a built in inflation target for six GMS and nine representative major trade countries to examine effect of domestic consumption expenditures and China’s exchange rate regime on country-specific money supply and exports. We find lagged changes in national exports have near zero effect on contemporaneous change in national money supply, but changes in lagged money supply have very significant effect on changes in contemporaneous exports. Cambodia, Laos, and Vietnam seem to react similarly with largest positive money changes from domestic consumption expenditures shock and largest negative money change from change in exports. Myanmar has opposite effect than these three countries. Only Thailand has magnitude in causation like the industrialized nations. Keywords Greater Mekong Subregion, Money Supply, Exports, DSGE Model

Single-Currency Monetary System. Architecture and Basic Operations

This paper discusses the architecture and major components of the single currency monetary system. The monetary system model we consider in the paper is general enough and encompasses models described previously in literature, such as the central bank digital currency, positive money, and sovereign money. We examine the properties of various types of title accounts including fixed balance and variable balance digital title accounts. We conclude the paper by defining a complete set of basic operations such that any monetary operation within the single currency monetary system can be represented as a combination of basic operations from the set.

True Islamic Banking — A New Proposal Based on ‘The Positive Money Proposal’

The Positive Money proposals and the 100% reserve debates, which have almost a century of discussions and research behind them, have now gathered considerable momentum. A cursory perusal of the proposals shows that the features contemplated, with some modifications, may offer a solution for true Islamic banking that is not only free of ribā, but one that promotes the objectives of the Sharī‘ah. Further, the final design, after incorporation of the sharī‘ah rules, will satisfy the ribā provisions laid down by the earlier jurists.

Polish cooperative banks as net lenders in the money market

Abstract Due to the traditional operational model of cooperative banks which is mostly based on financial intermediation, the range of a local bank’s social influence in a given environment is highly dependent on the money transfer balance, that is using local money to satisfy local needs. A typical obstacle to this activity could be observed in Poland, in positive money transfers in those banks understood as the excess of deposits from customers over loans given to them. The purpose of the following paper is to examine this phenomenon in Polish cooperative banks in comparison to credit cooperatives in Europe together with its explanation on the basis of the selected group of cooperative banks in Poland. According to the sector data in the years 2004-2015 Polish cooperative banks are net lenders for the remaining entities of the financial sector. On the European market, on the other hand, groups of cooperative banks aim to balance money transfers. It is the activity of the biggest sector players that mostly influences the information concerning credit cooperatives, which is why more thorough research into the group of over 90 Polish cooperative banks was conducted in the years 2009-2016. In the examined group deposits exceed loans and the phenomenon continues to grow and it has been observed in over three quarters of the institutions in question since 2011.

Opening Value Theory to the Brand

This essay explores the value form of branding as it can be understood through an interpretation of Marx's value theory in the tradition of Resnick and Wolff. It argues that a brand is best understood as a fictitious value form—a construct that allows expected future revenues to circulate as current values. In combination, consumers’ communicative work about a brand and their payment of a price premium at the cash register make the brand intellectual property with a positive money equivalent. The brand's value form bears no necessary relationship to the paid advertising, marketing labor, and unpaid communicative work of consumers that went into its creation but is rather found to be in proportion to the expected future payments of the price premium. The brand's money equivalent can now potentially be realized, but no productive labor has yet been performed and no labor value has been realized, making the brand a fictitious value form.

Constructing and contesting City of London power: NGOs and the emergence of noisier financial politics

Existing literature on the City of London has tended to focus on its ‘structural power’, while neglecting political and narrative agency. This paper acts as a corrective by presenting evidence to show that since the financial crash of 2008 the political terrain the City operates on has become more contested, crowded and noisier. The contribution develops a middle course between a positive assessment of the role of civil society in relation to global finance, and a more pessimistic reading. We demonstrate how macro-narratives and public story-telling both construct and contest City and financial sector power. In a new pattern since the financial crash, NGOs have moved from campaigns of limited duration and narrow focus, to a more sustained presence on macro-structural issues. Adopting a supply–demand framework for assessing governance and regulatory change, we look at the emergence of TheCityUK as a new advocacy arm and the strategies of three of the more prominent and focused NGOs that have mobilized in the aftermath of the crash: the Tax Justice Network’s (TJN) use of the ‘finance curse’; Positive Money on private endogenous money creation; and Finance Watch counterweight strategies at the level of the European Union. We suggest these mobilizations highlight the need for a more concerted and orchestrated construction of a global institutional civil society infrastructure in finance (a global financial public sphere) to achieve greater access, resources, scrutiny and oversight for a range of specialist expert NGOs.

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Do Capital Flows Matter to Stock and House Prices? Evidence from China

ABSTRACTThis article analyzes the impacts of foreign direct investment (FDI) and short-term capital flows, otherwise known as hot money, on stock and house prices in China. Empirical results, estimated using the local projections approach, reveal that a positive hot money net inflow shock significantly increases stock and house prices and the impacts persist for up to 1–2 months, while a positive FDI net inflow shock contributes significantly to lagged house price appreciation but has no effect on stock prices. This study also identifies negative pass-through effects of FDI net inflows on hot money net inflows and positive pass-through effects of stock prices on house prices.

Money reform and the Eurozone crisis: panacea, utopia or grassroots alternative?

The economic crisis that broke out in 2007–2008 and the ongoing crisis in the Eurozone has given a new urgency to discussions about alternatives to capitalism, and a new salience to proposals for monetary reform and for grassroots economic alternatives. Using Marx and Engel’s concept of Utopianism as an analytical tool to distinguish between what is the work of ‘cranks’, and what of ‘brave heretics’, the paper examines four monetary responses to the crisis: (1) Positive Money’s call for a state monopoly on money issuance; (2) the reintroduction of national currencies, in particular the drachma; (3) proposals for state-issued parallel currencies; and (4) grassroots or subaltern money networks of various types. The paper argues that the dominance of neoliberal ideology at a European Union level means that proposals for monetary reform at the international and national level are unlikely to be taken seriously by elites and consequently seem utopian in Marxian terms. There seems to be little political will to engage with the complexities of and potential opportunities of a more diverse monetary architecture within the Eurozone, and a perceived need to ‘discipline’ potentially ‘irresponsible’ governments like Greece’s SYRIZA, although ‘responsible’ actors in the north of the Eurozone get more leeway. The potential of grassroots alternatives is also too often overstated. While alternative currency networks developed as part of the Greek crisis are not particularly well developed, alternative currency networks could work as sites of innovation, normalising the idea that there are progressive alternatives to Eurozone breakup.

The Effect of Macroeconomic Variables on the Stock Market Index of the Tehran Stock Exchange

This paper examines the relationship between stock market index and macroeconomic policies (Fiscal and Monetary) on Iran's economy using quarterly data in the period 1999-2013. This study employed cointegration test and vector autoregressive models (VAR) to examine relationships between the stock market index and the macroeconomic variables. The empirical results reveal that a positive money shock can increase stocks return. According to impulse responses, the government expenditure had a slight impact on stocks return in the short term. But the government expenditure has a positive effect on exchange index in long run. Also the effect of taxes on the stock's price index is negative, so that it reaches its maximum level after the third lag and then alleviates. The GDP shock has positive effect on the stock's price index. Increase in production level leads to increase in earnings and profitability, leading to a positive response from stocks index. Therefore the results showed that the macroeconomic variables such as inflation, exchange rate and GDP have significant effects on Tehran exchange price index. So the hypothesis that the improving economic factors can have a useful role in the booming capital market is confirmed. Also the effect of fiscal policy factors such as tax revenues and government expenditures is more than monetary policy factors on stock returns.

Vollgeld und Full Reserve Banking: die Kritik auf dem Prüfstand – eine Replik

In der Dezemberausgabe 2014 veroffentlichte der Wirtschaftsdienst einen Aufsatz von Martin Sauber und Benedikt Weihmayr zum Vollgeld und Full Reserve Banking. Dazu ausert sich Lino Zeddies als ein Vertreter der deutschen Vollgeldbewegung kritisch und zeigt die Vorteile einer Vollgeldreform auf. Anschliesend stellen die Autoren in einer Erwiderung ihre Sicht dar.

A Neuroeconomics Analysis of Investment Process with Money Flow Information: The Error-Related Negativity.

This investigation is among the first ones to analyze the neural basis of an investment process with money flow information of financial market, using a simplified task where volunteers had to choose to buy or not to buy stocks based on the display of positive or negative money flow information. After choosing “to buy” or “not to buy,” participants were presented with feedback. At the same time, event-related potentials (ERPs) were used to record investor's brain activity and capture the event-related negativity (ERN) and feedback-related negativity (FRN) components. The results of ERN suggested that there might be a higher risk and more conflict when buying stocks with negative net money flow information than positive net money flow information, and the inverse was also true for the “not to buy” stocks option. The FRN component evoked by the bad outcome of a decision was more negative than that by the good outcome, which reflected the difference between the values of the actual and expected outcome. From the research, we could further understand how investors perceived money flow information of financial market and the neural cognitive effect in investment process.