Role Of Monetary Factors Research Articles

THE INFLUENCEOF MONETARY POLICY INSTRUMENTS ON THE INVESTMENT ACTIVITY OF COMPANIES IN BELARUS

Approaches to defining investment activity entities reviewed. The role of monetary factors in the increase investment activity is defined. The influence of instruments of monetary policy for the investment activity of Belarusian companies is discussed. Measures to increase investment activity are offered.The combined regime currency and inflation targeting is proposed.

Stochastic Trends and Fluctuations in National Income, Wages, and Profits

Macroeconomics and especially the theory of business cycles went through very important changes during the last ten years. During the seventies most macroeconomists believed that economic activity evolved around a deterministic trend. Cyclical components and unanticipated changes in policy were believed to be the source of economic fluctuations. The real business cycle (RBC) models which began to emerge in the early eighties cast doubt on this belief. According to the RBC theory, the cumulative -effect of permanent shocks to productivity explains economic fluctuations. The proponents of the RBC theory assume that productivity shocks are exogenous and are not affected by aggregate demand shocks. Therefore, monetary shocks have no role in explaining economic fluctuations. In fact, according to the RBC theories, money responds positively to fluctuations in production induced by technological shocks. Therefore, the positive correlation between output and money is one of reverse causation. Critics of the RBC theories argue that productivity shocks cannot be treated strictly as exogenous. Evans [5] provides evidence that a significant portion of the variance of productivity impulse can be attributed to aggregate demand shocks. Another line of research by Christiano and Eichenbaum [4] shows that monetary-policy shocks have persistent liquidity effects as well as persistent increases in output. In this paper we investigate the role of monetary factors in explaining fluctuations in both

On the Role of Monetary Factors in Business Cycle Models

SummaryGranger-causality tests and innovation analyses based on Vector Autoregression models seem to deny any role for monetary factors in generating and shaping business cycle fluctuations. The present paper shows that such empirical support for Real Business Cycle theories is flawed. In particular, it is demonstrated that an extended version of the Lucas paradigm can explain the existing evidence rather accurately, when changes in policy regimes are explicitly modelled.

The Demand for Liquid Asset Balances by U.S. Manufacturing Corporations: 1959-1970

One of the most significant developments in macroeconomic analysis in the post-World War II era has been the dramatic resurgence of interest in the role of monetary factors in economic activity. The demand for money has been a focal point of this monetary renaissance, and in recent years a proliferation of studies has focused on questions such as the motives for holding money balances, the effects of changes in the rate of interest, and the existence of economies of scale for cash balances. The trend toward disaggregation of macro functions has been reflected in demand for money studies of the corporate sector as well as the household sector.

"The Brookings Model Volume: A Review Article": A Comment

Z VI GRILICHES has written an interesting and provocative article on the first volume on the Brookings model. He does not report on later materials (cf. his footnote 2) that are pertinent to reviewing this continuing research project.1 In some places his own preconceptions and specializations caused some loss of perspective. In a few places too, he obtains seemingly contradictory or implausible results by making extreme assumptions about coefficients or by extrapolating to distant time points, inappropriate for testing a system designed for short-run business cycle analysis. This comment is designed to assure the reader a balanced view. At a general level, Griliches does not indicate the progress in model building associated with the Brookings project. It should be recalled that most of the prior models were small (on the order of 30 equations), had a limited degree of disaggregation of expenditure components and virtually no industry detail, lacked a financial sector, and did not explicitly include government policy parameters.2 The Brookings model has several noteworthy features which advance the state of the art of model building, solution, and simulation. 1. Scale: The model is substantially larger than its predecessors. Estimates of single equations do not necessarily give reasonable complete system results. We have solved a 200 equation condensed version of the model and obtained sensible cyclical and growth path predictions. Future large scale models may give better predictive results; but, at least we have shown that it is feasible to work with systems of several hundred equations. 2. Government Policy Parameters: Rather than simply dealing with variables such as tax yields and required reserves, the model treats the many instruments of government policy action explicitly. That is, tax yields are not controlled by the government but only tax rates. This makes for a more realistic description of the actual structure of the economy; it also permits more sensible simulation of policy changes. 3. Sector and Industry Detail: There is more extensive treatment of several sectors such as housing, financial, agricultural and foreign trade. At the industry level, there are now eight production sectors and an expansion to thirty-three is in progress. For each of these sectors, there are price, wage, employment, hours, investment, and so forth, equations. Such extensive treatment in a macro model has not been attempted previously. 4. Monetary Influences: With the exception of T. C. Liu's model, other formulations deemphasized the role of monetary factors.3 And, even in the Liu model, the monetary sector was quite limited. In the Brookings model, the full monetary sector comprises over thirty equations. 5. Input-output: This is the first attempt to integrate an input-output structure into a cyclical model. While input-output is only a limited approximation of the technical structure of the economy, it does permit the translation of GNP component demands into industry gross outputs and industry prices into GNP component prices. As has been shown elsewhere, within the same framework, it is possible to relax the input-output elasticity of substitution assumptions and apply more general CES production functions.4 Yet, an input-output type structure is still required because production from

Facteurs monétaires et stabilité économique

Monetary factors affecting economic stability The criteria of economic growth and the meaning of stability are defined. The connections between stability and growth are then examined. It is noted that two schools of thought exist in this matter : one refuses all short-run instability, the other finds that instability and growth are part of the same process and inseparable. As regards the monetary aspects of short-run fluctuations it is significant that fluctuations in real magnitudes and in money flows occur together and that most economists agree that the proximate causes of fluctuations are to be found in expenditure changes. This does not mean , of course , that monetary factors alone can avoid fluctuations. This point of view is illustrated by an analysis of the «real» and «monetary » factors in instability and of their interactions. The latter point has tended to be neglected in much modern work on the cycle. For example, the role of monetary factors in depressions is highly important. The influence of credit expansion during the up-swing is also fundamental. It is main¬ tained that the elimination of monetary factors in the trade cycle would in fact remove most of the causes of instability. Unfortunately, their elimination is not likely to be complete and the cycle will therefore remain. In the international sphere in particular the importance of monetary causes of instability cannot be stressed too much.

Real and Monetary Factors in the Determination of Employment Levels

Introduction, 251. — I. The role of monetary factors under three forms of wage policy, 252; A. The case of perfect competition in the product market, 252; B. The case of imperfect competition in the product market, 259. — II. Dependence on monetary factors of savings schedule, 262. — III. Dependence on monetary factors of real demand for cash balances, 269. — IV. Conclusions, 271.