Role Of Monetary Policy Research Articles

Main business profits at risk? Examining the financialization conundrum

We examine the impact of financialization on the profitability of firms’ main business activities and the role of monetary policy. Using evidence from Chinese A-share listed firms from 2008–2019, we reveal that financialization leads to a significant reduction in firms’ main business profits. The negative effect remains robust after testing for robustness and addressing endogenous concerns. We also find that expansionary monetary policy exacerbates this effect, and it is more pronounced when firms hold more short-term financial assets and in state-owned firms. Our findings suggest that enterprises shall strategically reassess investment priorities towards long-term operational sustainability and value creation, while mitigating excessive financialization tendencies.

The Impact of Monetary Policy in Achieving Exchange Rate Stability in the Iraqi Economy for The Period (1990 - 2023) an Econometric Study

The exchange rate is a monetary economic indicator that expresses a country's economic performance. The exchange rate is the basic foundation on which the economies of any country in the world are built, whether developed or developing. As a result, most governments seek to implement regulations that ensure the currency exchange rate remains stable. To avoid the radical changes that currencies will endure during another period. The exchange rate also plays a prominent role in monetary policy, due to its use as an intermediate target, or as a tool, or simply as an indicator of the competitiveness of countries through its impact on components of economic growth such as investment, the degree of economic openness, the inflation rate, the narrow money supply, and the volume of exports. And the volume of imports, and foreign exchange reserves. Therefore, the primary goal of this study was to try to identify the nature of the exchange rate. As a result, in the first section, we discussed the concept of monetary policy, its most important tools, its most important goals, the exchange rate, and Iraq’s experience in the field of exchange during the period (1990-2023). While the second section was devoted to measuring the impact of monetary policy in achieving stability in the exchange rate of the Iraqi dinar against the US dollar using the vector model. correcting the mistake. The study concluded with some recommendations to reduce exchange rate fluctuations.

Impact of Monetary Policy on Corporate Capital Structure Adjustment in a Financial Development Environment

This study aims to investigate the impact of monetary policy on the adjustment of corporate capital structure within the environment of financial development, focusing on listed companies at the Shenzhen Stock Exchange. Utilizing data from 2011 to 2021, the research employs regression analysis and generalized method of moments (GMM) to explore how quantity-based and price-based monetary policies influence capital structure adjustments. The findings indicate that changes in monetary policy significantly affect corporate capital structure adjustments. Specifically, quantity-based monetary policies accelerate these adjustments, though their impact is moderated by the level of financial development. In contrast, price-based monetary policies consistently exert a positive influence on capital structure adjustments. This study contributes to the understanding of monetary policy's role in corporate finance, providing empirical evidence from China's evolving financial market.

The Global Financial Crisis and the Role of Monetary Policy

The Global Financial Crisis and the Role of Monetary Policy

Economic Policy for Sustainable Development: Role of Monetary Policy, Fiscal Policy and Regulatory Policy

Economic Policy for Sustainable Development: Role of Monetary Policy, Fiscal Policy and Regulatory Policy

Should Monetary Policy in South Africa Lean against the Wind by Targeting the Financial Cycle?

Recently, several studies have argued about the interactions of the real economy and financial system, as well as the importance of financial cycles in business cycle fluctuations. To date, there exists near consensus among central bankers, economists, and other scholars that the financial cycle is an important source of business cycle fluctuations. This has raised the question of whether monetary policy should respond to financial instability and/or imbalances. As a result, we asked the following questions: Should monetary policy lean against the wind by targeting the aggregate financial cycle in South Africa? And what is the role of monetary policy in minimizing financial imbalances and instabilities in South Africa? The present article aims to provide answers to the above-mentioned question. Through the adoption of a multiple-equation generalized method of moments and structural vector autoregressive approaches, this article simultaneously estimates and compares both the finance-augmented and the conventional Taylor rules. It is shown that the South African Reserve Bank has considered developments in the aggregate financial cycle in setting its policy rate. Overall, there is clear evidence to conclude that the South African Reserve Bank can lean against the wind by targeting the aggregate financial cycle, but only as a genuine augmentation not as a fully flagged objective. This article adds new evidence to the South African literature on the prevailing debate of whether monetary policy should respond to developments in the financial system.

Role of Monetary Policy in Asset Price Inflation: A Comparative Study of Developed and Developing Economies

This study examined the relationship between monetary policy and asset price inflation in developed and developing economies, focusing on Pakistan. Using data from 2010-2024, the research employed multivariate GARCH and causality models to analyze the impact of various monetary policy tools on stock market indices and real estate prices. The findings revealed significant differences in economic policy's transmission mechanisms and effectiveness in influencing asset prices between developed and developing economies. In Pakistan, interest rate changes were found to have a more pronounced effect on stock market volatility than real estate prices. The study also highlighted the challenges developing economies face in implementing effective monetary policies to manage asset price inflation without compromising economic growth. This research is particularly important as it provides crucial insights for policymakers in developing economies like Pakistan, where the interplay between monetary policy and asset prices can have significant implications for financial stability and economic growth. By identifying the asymmetric effects of monetary policy and the role of policy uncertainty, this study contributes to developing more effective and targeted policy interventions in emerging markets.

Uncertainty shocks and monetary policy rules in a small open economy

Abstract Post the great financial crisis (GFC) of 2008–2009, there has been a surge in the macroeconomics literature on aggregate uncertainty. Although the recent literature has recognized the adverse real effects of global uncertainty shocks in emerging market economies (EMEs), the role of monetary policy in offsetting these adverse effects and their link with the exchange rates is not explored in the literature. We find that the currently followed interest rate rules (IRRs) under a flexible inflation-targeting regime are ineffective in stabilizing the domestic economy during periods of high global uncertainty in the EMEs. Using a small open economy new Keynesian DSGE model with Epstein–Zin preferences and second-moment demand shocks, we compare and propose alternate monetary policy rules that significantly reduce welfare losses. We find that the best monetary policy rule in terms of welfare depends on the nature of shock that is, first-moment or second-moment shock.

Financial stability and sustainable development: Perspectives from fiscal and monetary policy

AbstractThis paper studies the relationship between financial stability and sustainable development from the fiscal and monetary policy perspective in 33 developing countries and 7 developed countries in the period 2005–2020. Bayesian regression results show that financial stability positively affects sustainable development in both groups of countries with a low probability of impact. This probability is above 79.3% in developed countries and above 81.5% in developing ones. When considering the role of monetary policy, the direction of impact and probability is different. Specifically, financial stability in the environment of high inflation and increased money supply (ZscoreInf and ZscoreM2) negatively affects sustainable development in both country groups with high probabilities. In contrast, when considering the monetary policy with the foreign exchange reserves tool (ZscoreER), financial stability positively impacts sustainable development with the probability of 89.6% in developed countries and 92.5% in developing one. When considering the role of fiscal policy, financial stability with government spending (ZscoreGE) positively affects sustainable development with a probability of over 99.7% in the two groups of countries. Meanwhile, tax income in a financially stable environment increases the probability of a positive effect at 100% in developed countries, and a negative effect with a probability of 60.9% in developing countries. From the above results, we propose that central banks in both developed and developing countries should aim to stabilize prices and aim to maintain a low inflation rate to help limit shocks to sudden interest rate changes that cause market volatility. This is a premise to help stabilize finance and promote sustainable development. Furthermore, these countries should maintain an adequate foreign exchange reserve to withstand external shocks and ensure they have enough foreign currency to meet macroeconomic needs, which can boost confidence.

Conflict Inflation and the Role of Monetary Policy

ABSTRACT The aim of this study is twofold: on the one hand, to provide evidence of the positive association between the inflation rate and the labor share in the US; on the other, to show that monetary policy slows inflation by depressing the labor share. With the help of Bayesian econometrics, the paper shows evidence of a conflict Phillips curve. Furthermore, a structural vector autoregressive model reveals the detrimental effects of interest rate hikes on the labor share. Together, these results mean the monetary policy of administered interest rates resolves the class conflict in favor of capital to control inflation. Scrutiny of the US monetary policy development and a model of a controlled predator-prey system prepare the way for the empirical sections. Finally, the paper concludes that controlling the distributive conflict matters for impinging on inflation and that the Fed might follow alternative monetary rules to cease being the third party participating in the distributive conflict.

Monetary Policy Dynamics and Economic Growth: An Empirical Analysis of Indonesia's Economy using Time-Series Data and Error Correction Model (ECM)

This study investigates the relationship between monetary policy variables and GDP growth in Indonesia using time-series data from 1986 to 2021. Employing the Error Correction Model (ECM) framework, the research explores the presence of a long-run relationship among the variables and identifies significant monetary policy instruments that drive economic growth. The findings reveal a robust long-run relationship between monetary policy variables and GDP growth, indicating the sustained impact of monetary policy on Indonesia's economic performance. Specifically, the core finding highlights the significance of the inflation rate, exchange rate, and total reserves as influential monetary policy instruments driving growth in Indonesia. This finding helps policymakers better understanding about the relationship between monetary policy and economic development in the context of Indonesia by offering insightful information. By utilizing an extensive time-series dataset and employing the ECM methodology, this study contributes to the existing literature on the role of monetary policy in shaping economic growth, particularly in Indonesia.

Денежно-кредитная политика современной России

The role of the Central Bank in regulating monetary circulation and the analysis of trends in the Russian economy are also considered. The role of monetary policy in stimulating economic growth and potential directions for the development of the Russian economy are described in detail

The Effects of Fiscal Policy and Monetary Policy on Borrowing Costs and Credit Access for SMEs: An Empirical Study

The objective of this study is to investigate the impact of fiscal policies (FP) on borrowing costs and credit access (BCAC) for SMEs, considering the role of monetary policy (MP) as a the second independent factor. This research aims to understand more deeply how fiscal and monetary policies can be utilized to support growth and access to finance for SMEs, as well as identify remaining barriers to access to finance. Through comprehensive analysis, this study is expected to provide effective policy recommendations to improve access to credit for SMEs, which in turn can support economic growth and job creation. This study adopts a quantitative research design using statistical analysis to examine the impact of fiscal policies on borrowing costs and credit access for Small and Medium Enterprises (SMEs). The analysis will be conducted using the SMARTPLS 3.0. Sample size based on valuable samples are 120 of SME. The sampling technique used in this study will be purposive sampling. This approach will involve selecting SMEs that meet specific criteria, such as size, sector, and eligibility for relevant government programs or incentives. Result of this study state Fiscal Policy (FP) and Monetary Policy (MP) have a significant effect on Borrowing Costs and Access to Credit (BCAC).

Business cycles in the USA: the role of monetary policy and oil shocks

Business cycles in the USA: the role of monetary policy and oil shocks

Role of Monetary Policy in Economic Growth and Development: From Theory to Empirical Evidence

Role of Monetary Policy in Economic Growth and Development: From Theory to Empirical Evidence

Unlocking the Secrets of Economic Growth: Understanding the Transmission Mechanism of the Monetary Policy

This research investigates how changes in monetary policy impact Pakistan's economic growth. trajectory, focusing on macroeconomic indicators and monetary policy's role in long-term economic objectives. The research uses a quantitative approach and econometric methods to evaluate data from 1991 to 2020. Results show that certain variables, like interest rates, capital formation, labor force, and current account balance, positively impact economic growth, while others, like exchange rates, net trade, money supply, and private sector access to domestic credit, have negative impacts. These statistically significant correlations show how monetary policy variables and economic outcomes interact in complex ways.

The New Role of Monetary Policy in Promoting Developmental Central Banking: The Case of Financial Inclusion in Bangladesh

The world economy and global geopolitics have not been this complex in many decades. Indeed, the clouds have further darkened in recent months, and the global economic outlook looks more uncertain. The pandemic, the disruptions in the supply chain, the persistent uncertainties and fallout from the war in Ukraine, the commodity price shocks, and the worldwide increase in inflation, all in one, are in motion to make the global financial system so different than what we used to know. Regarding economic management, policymakers worldwide are finding out that the water will be choppy for some time, and the waves will be big and many. The recently concluded Annual General Meetings of the IMF and the World Bank provided a grim picture of the outlook of the global economy, including a potential food crisis if the war in Ukraine continues for a longer period.

Price Stability and Economic Development in Nigeria: Issues and Challenges

Price stability and economic development are crucial factors for the growth and prosperity of a nation. This study focuses on examining the issues and challenges related to price stability and economic development in Nigeria. The accumulation of public debt, volatility of crude oil prices, challenges in renewable energy penetration, the role of monetary policy, government expenditure, and financial inclusion are key areas of investigation The study adopted qualitative research method. The findings reveals that public debt has a positive relationship with economic growth, but its impact may vary depending on factors such as governance and debt sustainability. The implications of these findings are discussed, emphasizing the need for effective debt management, diversification of the economy, enhanced monetary policy effectiveness, strategic government expenditure, and promotion of financial inclusion. These recommendations can guide policymakers in formulating strategies and policies to promote price stability and foster sustainable economic development in Nigeria. Overall, this study contributes to the understanding of the issues and challenges related to price stability and economic development in Nigeria, providing valuable insights for policymakers, researchers, and stakeholders in the pursuit of economic growth and stability.

Efficiency of short-time work schemes and the role of monetary policy

This paper examines the relationship between the utilization of short-time work, inflation dynamics and monetary policy. Using a New Keynesian general equilibrium model with search and matching frictions, this study is a first to point out that short-time work can give rise to deflationary tendencies which may impact its efficacy, contingent on the monetary environment. While aggressive inflation targeting supports the stabilizing employment effects of short-time work, only little stabilization is observed when monetary policy is constrained by the zero lower bound. Our analysis also indicates that expanding the eligibility criteria may not deliver additional stabilization, whilst lowering the costs of short-time work could enhance employment even more.

Relationship Analysis Between Monetary Policy and Financial Sustainability in Iraq For the Period 2015–2021

This research aims to study and analyze the reality of monetary policy and financial sustainability in Iraq through either a descriptive or analytical approach by trying to link and coordinate between monetary policy and fiscal policy to enhance economic sustainability. The research is based on the hypothesis that the monetary policy of Iraq contributes to achieving financial stability, which improves economic sustainability by providing aid and assistance to the state to reduce the budget deficit and exacerbate indebtedness. The author used the monetary policy indicators, the re-deduction of Treasury transfers by the central bank and the money supply, and financial sustainability indicators, including the public debt indicators and the deficit or surplus to GDP indicator, to prove the role of monetary policy in enhancing the financial sustainability of Iraq and to show that monetary policy plays a role in making Iraq's economy more stable. The study found that there is a role for monetary policy in enhancing financial sustainability, significantly when oil prices decrease in global markets, directly or indirectly, through the use of a set of economic tools, including discounting treasury transfers, the money supply, and the exchange rate.
 
 Paper type: Research paper