Rate Cuts Research Articles

Economic Policy Changes in the Great Depression of the United States and the Great Depression of COVID-19

Since the COVID-19, the U.S. domestic economy has been hit hard, causing currency devaluation and a dramatic increase in unemployment. Economic policy during the Great Recession and COVID-19 had the impact of stabilizing the economy and saving the unemployment rate. It is of great significance to study the enormous positive and negative effects of these policies on the U.S. and global economies at that time and later. This paper analyzes and contrasts these effects with the support of literature and data. The Fed first changed its stance on rate hikes to cushion economic pressures, and then turned to rate cuts because of escalating trade frictions to sound recession alarms in the market. The spillover effect of U.S. macroeconomic policy adjustment is comprehensive. Affected by the financial hegemony of the United States, not only emerging economies are unable to resist the impact, developed countries are also difficult to escape the 'tail effect'. At present, many countries have government banks in order to avoid devaluation of their currencies, to prevent capital outflows, had to follow the Federal Reserve to make the decision to raise interest rates. The policies aimed at easing have all had a different impact on the U.S. economy and society.

Analysis of Overmacht Credit Agreements During Pandemic (Case Study of Loss Claims Rejections By Judges)

<span>The purpose of this research is to identify and analyze Covid-19 as a form of comparative advantage and the consequences of the advantage method in loan agreements and loan termination policies due to the Covid-19 pandemic. The research method is norm-law. It is a legal research method that examines and studies the provisions of legislation as a basis for subsequent analysis of the issues discussed. The research uses primary and secondary legal material for analysis through the study of relevant documents and literature. The analysis is a qualitative analysis that addresses the question in question. According to the research, Covid-19 is an unnatural disaster and thus can be classified as a measure of superiority. As a priority relationship, the laws governing the spread of Covid-19 result in a priority relationship with the loan agreement, which means that the debtor must continue to meet his obligations to the debtor even after Covid-19 is over. When it was implemented following POJK 11/2020, the debtor obtained credit relief through restructuring in the form of interest rate cuts, extension of maturity, reduction of funds owed, and interest reduction in arrears according to the restructuring table issued by the bank. After verification and analysis by the bank, the affected debtor Covid- 19</span>

YENİLENEBİLİR ENERJİ YATIRIMLARININ ARTTIRILMASINA YÖNELİK OPTİMAL POLİTİKALARIN BELİRLENMESİ: TÜRKİYE ÜZERİNE DEMATEL YÖNTEMİYLE BİR ANALİZ

Yenilenebilir enerji kaynaklarının birçok avantajı olmasına rağmen kullanılabilmesi için başlangıç maliyeti oldukça yüksektir. Öncelikle tasarımı, inşası ve işletilmesi için çok donanımlı ve kalifiye işgücüne ihtiyaç duyulmaktadır. Belirtilen bu hususlar da yenilenebilir enerji projelerinin gelişiminin önünde engel teşkil etmektedir. Dolayısıyla, temiz enerji projelerinin gelişimi için doğru politikaların belirlenmesi oldukça önemlidir. Bu bağlamda, farklı kriter setleri dikkate alınarak gerçekleştirilen yeni bir çalışmaya ihtiyaç duyulmaktadır. Bu çalışmanın amacı Türkiye’deki yenilenebilir enerji projelerinin arttırılması için gerekli olan en uygun stratejinin belirlenmesidir. Bu bağlamda, ilk olarak, geniş kapsamlı bir literatür taraması yapılmış ve beş farklı kriter tespit edilmiştir. Daha sonra, DEMATEL yöntemiyle bir analiz gerçekleştirilmiş ve en optimal stratejinin tespit edilmiştir. Bu çalışmanın literatüre en büyük katkısı ülkelerin sürdürülebilir kalkınması için önem arz eden temiz enerji projelerinin geliştirilmesi için gerekli olan doğru politikaların belirlenmesidir. Sonuç olarak, faiz oranlarının düşürülmesi yenilenebilir enerji yatırımlarının arttırılmasında en fazla önem arz eden kriterdir. Araştırma ve geliştirme çalışmalarının arttırılması da bu bağlamda önem arz etmektedir. Öte yandan, bankacılık sisteminin etkin olması, kalifiye personel yetiştirilmesi ve vergi indirimi sağlanması daha düşük önem ağırlığına sahiptirler. Netice itibarıyla, politika yapıcıların faiz indirimine öncelik vermesi gerektiği belirlenmiştir. Faiz oranı indirimi sayesinde, yatırımcılar daha düşük maliyetle kredi kullanabilme imkanına sahip olmaktadır. Bu durum da bu projelerin karlılığının artmasına yardımcı olmaktadır. Bunun sonucunda da yatırımcılar bu alana yönelmede istekli olabilecektir.

The Response and Results of Countries to the Fed's Rate Hike

Many financial institutions including Europe and Japan remained healthy during the global financial crisis, with deposits guaranteed by the federal government. The surge in demand for money did not have any destabilizing effects on the banking system. In fact, bank deposits also increased during this period. However, the rise in demand for money did cause some problems for the paper money distribution business. Traditional models of money demand suggest that interest rate cuts and federal stimulus payments to households have played a role in explaining the increase in money holdings. This study estimates that these factors account for only about 20% of the observed increase in currency holdings. The rest of the rise was likely due to increased precautionary holdings by people worried about the liquidity or solvency of financial institutions and as a contingency measure. It is in line with the disproportionate increase in demand for large-denomination. These results shed light on guiding further exploration of interest rates.

Macroeconomic Implications of Changes in Corporate Tax Rates: A Review

AbstractMany countries have initiated structural reforms in corporate income tax (CIT) to attract investment and promote growth. There has been a continuous decline in CIT rates worldwide. It is expected that cuts in CIT rates may increase after‐tax profits and encourage investment. A change in the CIT rate may also be shifted backward (by changing salaries and wages) and/or forward (by changing product prices). These are theoretical possibilities and may not have support from empirical evidence. In this paper we review empirical studies to assess the impact of CIT rate changes on the economy.

A shadow rate without a lower bound constraint

We propose a shadow rate without a lower bound constraint that measures the overall stance of monetary policy in any policy environment, prior and during the lower-bound period, as well as in the current “New Normal” environment, where unconventional monetary policies have become more standard. Using daily yield curve data we estimate shadow rates for the US, Sweden, the euro area and the UK, and document that they fall (rise) as monetary policy becomes more expansionary (contractionary), following announcements of policy rate cuts (hikes), forward guidance, and balance sheet expansions (contractions). In addition, we show two applications for our shadow rate. First, we decompose shadow rate responses to monetary policy announcements into conventional and unconventional monetary policy surprises, and assess the pass-through of each type of policy to exchange rates. We find that exchange rates respond more to conventional than to unconventional monetary policy. Lastly, counterfactual experiments in two DSGE models suggest that inflation in the US and in Sweden would have been on average about 0.8 and 0.33 percentage points lower, respectively, had unconventional monetary policy not been used.

Nonlinear Employment Effects of Tax Policy

AbstractWe study the nonlinear propagation mechanism of tax policy in a heterogeneous‐agent equilibrium business cycle model with search frictions in the labor market and an extensive margin of employment adjustment. The model exhibits endogenous job destruction and endogenous hiring standards in the form of occasionally‐binding zero‐surplus constraints. After parameterizing the model using U.S. data, we find that the dynamic response of employment to a temporary change in the labor income tax is highly nonlinear, displaying sizable asymmetries and state dependence. Notably, the response to a tax rate cut is at least twice as large in a recession as in an expansion.

Correlated factors with serum zinc levels of infertile male farmers in Larangan district, Indonesia

One in five people in the world is at risk of zinc deficiency. In Indonesia, 77.48% of the population has zinc deficiency. Zinc deficiency causes sperm abnormalities, such as hypertrophy and hyperplasia of the fibrous sheath, axonal disorders, and abnormal midpiece. Serum zinc levels of infertile males were significantly lower than normal males. Factors causing a lack of serum zinc are inadequate dietary zinc intake and zinc absorption inhibitors. Serum zinc levels are influenced by unclear factors. The purpose of this study was to analyze the relationship between Body Mass Index (BMI), zinc, iron, protein, tannins and phytate intake with serum zinc levels of infertile male farmers in the Larangan district. This research was an observational study with a cross-sectional design. The sample selection used a total sampling technique of as many as 58 male infertile farmers. Data was collected through interviews using a food frequency semi-quantitative questionnaire, measurement of height using a microtoise, weighing using a digital stepping scale, and laboratory tests of venipuncture blood samples. Data analysis was performed using Pearson correlation and Spearman range. The average BMI of respondents was above the normal limit (26.09). The average zinc intake was 8.99 mg/ day, the average iron intake was 18.31 mg/day, the average protein intake was 85.71 g/ day, and the average tannin intake was 139.93 mg/day. The average phytate intake was 1147.73 mg/day and the average serum zinc level was 78.02 μg/dL. The bivariate analysis showed that there was no relationship between BMI (p-value = 0.29), zinc intake (p-value = 0.42), iron (p-value = 0.33), protein (p-value = 0.70), tannins (p-value = 0.19), and phytate (p-value = 0.63) with serum zinc levels. The average zinc intake of infertile male farmers was below the cut of nutritional adequacy rate. Infertile male farmers are advised to increase their consumption of animal zinc sources to make ends meet zinc intake per day.

Monetary policy shock and impact asymmetry in bank lending channel: Evidence from the UK housing sector

AbstractBanks play a defining role in translating monetary policy shocks to pull or push‐effects in the housing market. The literature is ambiguous on the exact role of bank lending channel (BLC) in translating such effects into either moderation or acceleration of dynamics in the housing market. This paper argues that monetary policy shocks, of the same magnitude, can have asymmetric implications for a housing market via a state dependent BLC, particularly during expansion and recessionary phases of the business cycle. We test this hypothesis for the UK housing sector using a long quarterly data (1973Q1‐2015Q4) and employing Markov Switching Vector Auto Regression (MSVAR) models. Our results show that the magnitude of the bank lending channel is contingent upon the state of the economy, with a one standard deviation expansionary monetary policy shock producing a significant effect only in normal economic times. Further study on whether large cuts in policy rates could stimulate mortgage lending and whether there is impact asymmetry to dissimilar expansionary monetary policy shocks during financial crisis, we show that a sharp cut in policy rate indeed stimulates the BLC greater compared to smaller expansionary money policy shocks during recessions.

Asymmetric interest rate transmission in an inflation-targeting framework: The case of Colombia

After adopting an inflation targeting framework for monetary policy at the turn of the twenty-first century, Banco de la República, the Central Bank of Colombia, started actively using the monetary policy interest rate as its key policy tool. This paper examines the interest rate pass-through from the monetary policy rate to the retail rates in Colombia and explores asymmetries in the adjustment process within the framework of a nonlinear version of the autoregressive distributed lag (ARDL) and the non-linear autoregressive distributed lag (NARDL) models developed by Shin, Yo, and Greenwood-Nimmo (2014). The findings show that the policy rate plays a key role in determining deposit and lending retail rates, but the nature of the pass-through varies across different types of products. In the case of lending rates, the pass-through is nearly complete and takes around 12 months to be nearly complete. The results capture an asymmetric pass-through in deposit rates—i.e., greater when the policy rate is increased than when it is reduced—and an upward rigidity in the lending rates of consumer and ordinary corporate loans, implying that major retail lending rates respond more to policy rate cuts than to hikes, indicating that financial intermediaries are more reluctant to raise interest rates than to decrease them following policy adjustments. Results are robust to the inclusion of additional regressors.

Corporate Tax Rate Cut on the Cost Behavior of High−tech Companies: The Case of China

ABSTRACT This study aims to analyse whether there is a cost stickiness phenomenon in which Chinese companies recognize costs early in the years immediately preceding the tax rate cut (hereinafter TRC) in order to minimize tax burden, and to investigate whether high-tech companies with large TRCs have a higher level than general companies. The analysis results can be summarized as follows: First, there is a phenomenon of cost stickiness in Chinese companies in the year immediately before the TRC. Second, before the 2008 TRC in China, the level of cost stickiness of high-tech companies was not statistically higher than that of general companies. The results of this study provide the following implications that Chinese companies use cost as an incentive to minimize their tax burden. Companies can use appropriate surplus resources as a buffer against environmental changes and actively utilize inefficient resource allocation to promote innovative R&D and improve corporate performance.

The effects of corporate taxes on small firms

We study the impact of corporate taxes on firm-level investments and business activity by exploiting a 6 percentage-point reduction in the corporate tax rate in 2012–2014 in Finland. We use detailed administrative data and a difference-in-differences method comparing small corporations (tax rate cuts) to similar partnerships (no change in taxes). We find no significant average investment responses but do observe an average increase in annual sales (1.6%) and variable costs (2%) when comparing years before (2008–2011) and after (2014–2016) the tax rate cuts. These effects are driven by more cash-constrained firms and firms where the main owner actively works in the firm.

On the effects of taxation on growth: an empirical assessment

AbstractWe study the effects of taxation on the growth rate of the realper capitaGDP in a sample of 21 OECD countries, over the period 1965–2010. To do this, we estimate a version of the model proposed by Mankiw, Romer and Weil [(1992)Quarterly Journal of Economics107, 407–437.] augmented to consider bothdirectandindirecteffects of taxation on investment share parameters. We employ a semi-parametric technique—namely, a Finite Mixture Model—which combines features from mixed effect models for panel data and cluster analysis methods to account for country-specific unobserved heterogeneity. Our results suggest that taxes have a negative impact on growth: in the baseline model, the coefficient estimates indicate that a 10% cut in personal income tax rate (respectively corporate income tax rate) may raise the GDP growth rate by 0.6% (respectively 0.3%).

The impact of interest rate policy on credit union lending during a crisis period

We exploit the variation in the exposure to the Covid-19 pandemic of US states as a quasi-natural experiment to examine the impact of interest rate policy on credit union lending. We find that the interest rate cut can only enhance credit union lending in states that are less affected by the Covid-19 pandemic whilst hampering credit union lending in more affected states. This result is consistent across a number of robustness tests.

Monetary Policy and Bank Equity Values in a Time of Low and Negative Interest Rates

Does banks’ exposure to interest rate risk change when interest rates are very low or negative? Using a high-frequency event study methodology and intraday data, we find that the effect of surprise interest rate cuts by the ECB on European bank equity values – an effect that is normally positive – has become negative since interest rates in the euro area reached zero and below. This ‘reversal’ was far more pronounced for banks with a more deposit-intensive funding mix. We argue that these results can be explained by the zero lower bound on interest rates on retail deposits.

The Effect of the Securities Transaction Tax Rate Cut on the Liquidity in KRX

This study evaluated the impact of the securities transaction tax rate cut implemented in 2019 on the liquidity of the stock market. The empirical results are summarized as follows. First, cutting the transaction tax rate affects trading volume rather than spread or price. Additionally, this liquidity improvement more strongly affects low liquid stocks in the period before the transaction tax rate cut. Second, in low liquid stocks that showed effects in trading volume, individuals and foreigners took the leadership in overall trading. Third, liquidity improvement persisted not only in the short term immediately after the transaction tax rate cut, but also until the second half of the sample period. These empirical results show the differing effect of the transaction tax on improving liquidity by liquidity level and a limited effect in low-liquidity stocks. As investors trading low-liquidity stocks with high tax elasticity were sensitive to the burden of transaction costs, the effect of transaction tax cuts was strong, while such effects could not be found in stocks with high liquidity. These empirical results provide practical implications for the level of transaction costs and the method of setting as a means to revitalize market liquidity.

The Effects of Mortgage Rate Regulation in the Russian Federation

The main purpose of the present research is to define the impact of changes that took place in the monetary and credit policy of the Russian Federation. The changes touched upon the regulatory issues of mortgage lending which have influenced some aspects of life of the population, including the affordability factor of square meter housing prices in the Russian Federation. The article analyzes the money incomes of the population in the RF, including the main source of average salary, rates, volume and number of credits granted in the period from 2019 to the third quarter of 2021. This period reflects the current situation and takes into account the factor of economic consequences occurred during the pandemics, that is characterized by crisis in the economy. The research describes general trends in mortgage lending in the Russian Federation with the account of some factors. It also provides some solutions for the problems encountered, including the increase in the demand for housing and consequently growing real estate prices. The reduction in rates was aimed to increase affordability of housing, but in practice it had the opposite effect, when the rate cut led to increase in real estate prices. Based on the research findings, we can conclude that money and credit policy in the Russian Federation has failed in terms of mortgage rate regulation and that it is necessary to review the rate in the short-term.

Delayed Monetary Policy Effects in a Multi-Regime Cointegrated VAR(MRCIVAR)

The effectiveness of monetary policies under delayed policy impacts are explored. Initially, in the context of a differential delay system, the macro-finance link is investigated. The nonlinear macro system with delays gives rise to a time-delayed optimal control problem. The optimality conditions are then analyzed, and the control problem is numerically solved by discretization and optimization methods. These solutions suggest that with too much delay, destabilizing financial conditions may emerge, rendering the policy ineffective. Then the possibility of asymmetric adjustments to a long-run steady-state, in a non-stationary environment is explored using a multi-regime cointegrated VAR (MRCIVAR) model for both an interest rate cut, and a non-interest rate cut regime. Though the rate cuts may not perform well with too long of a delay, given diverse shocks, monetary policy still performs better in a rate cut regime. Given the perils of deteriorating financial conditions, the better stabilization properties in a rate cut regime are empirically validated through data for European countries and the US.

The Effects of Demand and Interest Rates on Investments, Evidence of Overinvestment from Two Behavioral Experiments

This article analyzes the causes of overinvestment and thus investment cycles with two behavioral experiments. In the experimental simulations increases in demand and cuts in interest rates increased unit profits, which led to uncoordinated and thus collectively too high investments (collective error). This made it possible to demonstrate collective errors that led to overinvestment and investment cycles (boom and bust cycles). Central banks and companies should take this into account when making their decisions. The experiments show the fundamental problem of uncoordinated supply adjustment and a tendency on the part of market participants to neglect the behavior of other actors and to underestimate the influence of the market on their own investment decisions.

Development effect evaluation of medium permeability oil fields in the western Daqing

Longhupao oilfield is a large medium permeability oilfield with the earliest development and the largest area in the western periphery of Daqing. It belongs to a reservoir controlled by lithology and structure. After decades of water injection development, it has entered the development stage of ultra-high water cut stage. The remaining oil is highly dispersed and it is more and more difficult to tap the potential. In order to make the later development adjustment more targeted, it is necessary to evaluate the development effect of the oilfield. Therefore, starting from the field data of the oilfield, this paper comprehensively uses mathematical formula calculation and reservoir engineering methods to evaluate various indexes such as water drive recovery rate, water injection utilization rate, oil production rate, liquid production rate and comprehensive water cut in the current development stage of Longhupao oilfield, The experience of each stage is summarized to provide reference for the formulation of development adjustment strategy in ultra-high water cut period.