Traditional Policy Tools Research Articles

MONETARY INSTRUMENTS IN ADDRESSING ECONOMIC CRISES: EFFECTIVENESS AND CHALLENGES

This article aims to investigate the anti-crisis reforms of the monetary policy of the Federal Reserve System (FRS) of the United States during the global financial crisis, the pandemic period, and the worsening of the military conflict in Ukraine. The study showed a significant decline in inflation due to the reduced demand for goods and services in the first two crises. Under these conditions, the Fed needed unprecedented measures to soften its policy. Repo rates fell to their lowest level during the 2008 crisis but rose during the pandemic, indicating a significant demand for these instruments to ensure stability. Since the 2008 crisis and pandemic, the easing policy has led to an increase in Fed assets. This has significant implications for the ability of monetary policy to respond to today's challenges and has led to the need for very careful control of assets. But in 2022, the Fed had to take measures to curb inflationary trends, in particular raising the discount rate.The regression analysis carried out in the article demonstrates a significant impact of monetary instruments on the consumer price index, which indicates the effectiveness of those methods used by the Fed. The article analyzes the use of traditional and non-traditional monetary policy tools of the Fed in different economic conditions and the possible risks and negative consequences of the use of non-traditional tools, such as quantitative easing and very low interest rates. Although these techniques can support the economy in a crisis, their risks need to be taken into account. The findings contribute to the knowledge of monetary policy as a management tool and provide stakeholders with valuable insights for future strategizing.

The impact of monetary policy interventions on economic stability during global pandemics; a case study of the United States’ monetary policy initiatives in the fight against the Covid 19 pandemic

The study assesses the importance of monetary policy in the fight against global pandemics. Specifically, the study delves into United State’s monetary policy responses to the unprecedented COVID 19 pandemic; a global pandemic that pushed governments across the globe to institute strict measures as well as impose restrictions in their quest to contain the virus and ultimately minimize its economic ramifications. As such, the study compares the impact of monetary policy on economic growth (Real GDP) during the pandemic as against the pre-pandemic periods with the goal of assessing its relative impact on ensuring economic stability. The research shows that the impact of traditional monetary policy tools on economic stability and growth diminished during the Covid 19 pandemic compared to the pre-pandemic period. The pandemic, therefore, introduced a novel economic dynamic, one that various world economies were evidently not ready for. The result of the study calls for a holistic and adaptive monetary policy in periods that engender major economic uncertainties, such as global pandemics. The study shall add to the discourse regarding the limitation of monetary policy during pandemics. It shall provide suggestions that seek to enhance economic resilience and provide pertinent information that could potentially be incorporated into designing strategies that minimize the economic impact of pandemics in the future. Keywords: Pandemic, GDP, Economic Stability, Monetary Policy, COVID 19, Intervention, Economic Growth.

Determinants of the choice of exchange rate regime in oil-exporting countries

This study examines the factors that determine exchange rate regime choice in oil-exporting countries. We run ordered logit regressions for an unbalanced panel dataset of 138 countries covering 1974–2021 and confirm that oil-exporting countries are more likely to adopt a fixed exchange rate regime than other countries. The main reason for this is that, given the volatility and uncertainty of oil revenues, traditional monetary policy tools are ineffective, resulting in the exchange rate serving as a nominal anchor. This is supported by our findings on the distinct roles of output volatility, government spending, fiscal cyclicality, and central bank independence in determining exchange rate regimes in oil-exporting countries.

Revisiting the interest rate-investment nexus in India: fresh perspective from non-parametric analysis

PurposeIt is generally believed that business spending on capital expenditure tends to decrease as interest rates rise, and vice versa, this is not always the case. The previous literature produces inconclusive results vis-à-vis the interest rate and investment nexus. This study analyzes the responsiveness of investment to changes in high and low levels of interest rates in India through a quantile-based, non-parametric method utilizing annual data from 1980 to 2022.Design/methodology/approachThis study uses Quantile-on-quantile (QQ) technique proposed by Sim and Zhou (2015) to examine the impact of interest rate quantiles on quantiles of investment. In addition, long-term association and the direction of causality are estimated through the Cho et al. (2015) test of quantile cointegration and the Jeong et al. (2012) Granger causality in quantile (GCQ) test, respectively.FindingsThe empirical evidence validates that the linkage between investments and interest rate is not consistently negative and varies from quantile to quantile. The study finds a negative impact at median quantiles and a positive impact at extreme higher quantiles. Conversely, the impact at lower quantiles is negligible, which is also observed from quantile cointegration, indicating the presence of a statistically significant association above the median quantiles. Additionally, the study finds one interesting finding that there exists unidirectional causality from investment to interest rates in India rather than other way around.Research limitations/implicationsThe study provides significant implications for policymakers as it suggests that during extreme economic conditions, the effectiveness of traditional monetary policy tools to boost capital formation is restricted. Policymakers may consider alternative measures to stimulate investment during these time periods. The study additionally posits that the neoclassical theory of investment may not be readily applicable in emerging economies in its unaltered state, mostly due to the lack of well-developed financial markets.Originality/valueThere is a limited literature available on non-linear linkage between interest rates and investment. The present study adds to the existing knowledge by investigating how investment responds differently to fluctuations in interest rates, while incorporating the complete distribution of both the variables.

Transformation of the role of the state in the regulation of economic processes through the prism of modern trends in the development of the world economy

The article aims to analyze the current trends in the development of the world economic system, identify the current risks of its development, and identify the vectors of transformation of the macroeconomic regulation system in the conditions of the departure from the state-centric paradigm. The influence of globalization processes on the mechanisms of regulation of economic processes and changes in the weight and scope of application of traditional macroeconomic policy tools are studied. In the structure of the risks of the development of the world economy, those that have the most significant long-term impact in case of untimely application of corrective strategies are identified, namely the threat of a large-scale debt crisis in developing countries, the risk of non-fulfillment of the Sustainable Development Goals. An analysis of the conceptual reasons for asymmetric economic development on the global market was carried out. The mutual conditioning of probabilistic events at the meta-level is shown. Based on understanding the mainstream nature of the tendency to move away from the state-centric paradigm, the erosion of national sovereignty and the formation of governmental and non-governmental international organizations of their sovereignty based on the alienation of objects of power from the state were investigated. Examples of the influence of non-state actors on the strategic directions of development of the world community as a whole and the national economic system represented by the Club of Rome and the IMF, are given. Identified factors affecting the country's place in the system of determining trends in geopolitics depend on several factors, including the country's image, the ability to mobilize human and material resources, independence in determining its goals and interests, the state's ability to form effective alliances and coalitions. It illustrated (based on the history of Ukraine's interaction with the IMF) the causes and consequences of the deliberate loss of autonomy and independence regarding decision-making regarding domestic economic policy and transformation into an object of world politics. Keywords: state regulation of the economy, macroeconomic regulation, world economy, globalization, sustainable development, economic policy, international organizations.

Changes and Impact of Monetary Policy in the United States: Quantitative Easing and Federal rate hikes

In response to the 2008 financial crisis, marked by the collapse of Wall Street giants like Bear Stearns and Lehman Brothers, the U.S. faced significant economic challenges. Traditional monetary policy tools proved ineffective as interest rates neared the Zero Lower Bound. Consequently, the Federal Reserve implemented Quantitative Easing (QE) as an unconventional measure to stimulate financial markets. This policy was executed in four phases, and by the end of the fourth round, U.S. inflation rates surpassed the 2022 target. Elevated inflation impacted living standards, prompting the FED to introduce interest rate hikes in 2022 to control it. Supply chain disruptions were a major contributor to this inflation spike. This paper uses qualitative and statistical methods to explore QE and the subsequent FED rate hikes. It emphasizes that QE essentially expanded the FED's Balance Sheet and uses visual data like graphs to illustrate the FED's actions since 2022. The article provides a comprehensive view of U.S. monetary policy adaptations during and after the financial crisis. The first three QE rounds addressed the 2008 crisis aftermath, while QE4 combated the economic fallout of COVID-19. The 4 rounds of QE and the last 2 years of Fed rate hikes have been generally successful. Both monetary policies have had some proven effect on the US economy. However, by critical thinking, QE has potential downsides, like fostering economic bubbles and inflation. And the Fed's repeated interest rate hikes have led to the problem of bank failure. Therefore, the Fed's monetary policy choices, especially unconventional ones like QE, require weighing benefits against potential risks.

Integrating norms into the logic of energy and environmental policymaking

Norms play a powerful role in shaping behaviors like energy consumption and adoption of clean energy technologies. Interventions that specifically target norm perceptions (like home energy reports featuring social comparisons) are widely deployed and studied. However, traditional policy tools like financial incentives and mandates may also affect perceived norms, and these dynamics remain poorly understood. Early research on these unintended norm-based effects suggests that they may be large and could either undermine or enhance the effect of financial incentives depending upon context. We argue that understanding the dynamics of norm-based effects could increase the impact and equity of energy and environmental policies. In this paper, we develop a model that describes how policies (including incentives, mandates, and informational interventions) may shape behavior through both norm-based and incentive-based mechanisms and identify high-impact areas of future study.

The transnational politics of religion: Turkey's Diyanet, Islamic communities and beyond

ABSTRACT The article builds on current academic debates pertaining to the use of religion in global politics. By examining how and why religion is used as a tool for foreign policy aims as well as for perpetuating a state’s identity and institutional capacity at home and abroad; the article presents a theory-informed discussion on Turkey’s transnational politics of religion from a comparative perspective. The country’s use of religion as a political tool outside of its borders has been studied in Western Europe, Africa, Asia and the Balkans thanks to extensive fieldwork and interviews conducted between 2016 and 2020. The article investigates how and why Turkey has implemented similar policies with different aims in different geographic territories and the underlying material and normative motivations for this pursuit. The main argument presented in the article is that Turkey, under the rule of the AKP (Justice and Development Party), employs religion for three fundamental reasons: to bolster its regional and global influence, to access regions or groups that are difficult to reach through traditional foreign policy tools and to alter domestic political balances or amass power.

Toward Achieving Local Sustainable Development: Market-Based Instruments (MBIs) for Localizing UN Sustainable Development Goals

In recent years, sustainable community development has gained traction for addressing local environmental, social, and economic issues. Cities worldwide are committed to implementing sustainable community plans (SCPs) in their efforts to achieve sustainable development, and more recently, to localize the United Nations’ Sustainable Development Goals (SDGs). Although there are over 1000 plans in Canada, a gap exists between creating these plans and implementing them. Integrating market-based instruments (MBIs) with traditional policy tools would help to diversify revenue generation and thus mitigate these constraints. This paper presents a new and comprehensive categorization of MBIs that aligns the locally applicable ones with the environmental aims of both SCPs and SDGs. The categorization framework has been tested through focus groups with key municipal staff from two Canadian communities. The new categorization framework aligned over 50 locally applicable MBIs with 8 different environmental topics and 12 SDGs. The paper presents a useful tool for implementing SCPs and SDGs and contributes to the understanding of MBIs for enabling local progress in sustainable development.

Monetary Policy Response in the Republic of North Macedonia and the Republic of Albania for Coping with the Pandemic COVID-19 in 2020

This study aims to analyse how the monetary policies of the Republic of North Macedonia and the Republic of Albania, as one of the two critical macroeconomic policies, have reacted in response to COVID-19 for the year 2020. Last year, the year 2020, the pandemic caused these two countries to react through monetary policy. This research examines how central banks of both countries have changed traditional monetary policy tools for tackling the pandemic, starting with open market operations, required reserve ratio, the overnight loans interest rate, and the available deposits interest rate. The research continues with analyzing whether they were used and what non-traditional tools were applied in that period. The study analysis concludes which monetary policies have been pursued in the Republic of North Macedonia and the Republic of Albania, whether there have been non-traditional tools and how the scope for interbank interest rate volatility has changed. Our study revealed that both countries had pursued an expansive monetary policy, there were also non-traditional tools, and the scope for interbank interest rate volatility has shifted towards narrowing.
 This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

Platform mergers and antitrust

Abstract Should internet era merger policy differ from industrial era merger policy? Platform ecosystems rely on economies of scale, data-driven economies of scope, high-quality algorithmic systems, and strong network effects that frequently promote winner-take-most markets. Their market dominance has generated competition concerns that appear difficult to assess with traditional merger policy tools. This paper examines the acquisition strategies of the five major U.S. platforms—Google, Amazon, Facebook, Apple, and Microsoft—since their inception. We discuss the main merger and acquisition theories of harm and how these operate differently than in the past. To address merger and acquisition concerns of multi-sided platforms, we develop four proposals that incorporate (i) a new ex ante regulatory framework, (ii) an update of the conditions under which the notification of mergers should be compulsory and the burden of proof should be reversed, (iii) differential regulatory priorities in investigating horizontal versus vertical acquisitions, and (iv) an update of competition enforcement tools to increase visibility into market data and trends.

Shaping healthy and sustainable food systems with behavioural food policy

AbstractThis paper focuses on policies that are enlightened by behavioural insights (BIs), taking decision-makers’ biases and use of heuristics into account and utilising a people-centric perspective and full acknowledgement of context dependency. Considering both the environmental and pandemic crises, it sketches the goal of resilient food systems and describes the contours of behavioural food policy. Conceptually built on BIs derived from behavioural economics, consumer research and decision science, such an approach systematically uses behavioural policies where appropriate and most cost-effective. BI informed tools (nudges) can be employed as stand-alone instruments (such as defaults) or used to improve the effectiveness of traditional policy tools.

Проблемы формирования компетенций организации: стратегические аспекты

The purpose of the study is to determine the internal organizational characteristics and parameters of personnel policy aimed at increasing the strategic competence of the organization. The article examines the opportunities that the management of modern organizations faces in the field of forming a strategically competent organization. The analysis of scientific literature shows that for this purpose it is important not only to develop the competencies of employees, but also to create an adequate organizational context that encourages them to search and generate new knowledge, which in turn actualizes the problem of coordinating various elements and components of the organization: organizational culture, information management, digitalization of business processes, etc. At the same time, the importance of traditional personnel policy tools does not decrease, although it is undergoing some changes. The direction and nature of these changes is determined by the expediency of using the concept of a competency-based approach in practice. In this case, it is necessary to analyze business processes and identify the personnel core as the main link that forms the strategic competencies of the organization. The scientific novelty lies in the substantiation of the internal organizational characteristics and parameters of the personnel policy, which make it possible to increase the effectiveness of the use of employee competencies as a key factor in the development of the organization's competitiveness.

Doing More with Less: Leveraging Social Norms and Status Concerns in Encouraging Conservation Farm Practices

Engagement in conservation farm practices often lags behind what would be predicted by an analysis of economic returns. Through a number of novel experiments, we illustrate how identity-based utility can be harnessed to encourage pro-environmental behaviors. Results show that providing farmers with an opportunity to demonstrate their “green credentials” as well as the use of descriptive norms can encourage conservation practices. Interventions such as these represent a low-cost yet powerful supplement to traditional policy tools. New approaches for engendering behavioral change are likely to be particularly important in a U.K. context now that the United Kingdom has left the European Union.

Platform Mergers and Antitrust

Should internet era merger policy differ from industrial era merger policy? Platform ecosystems rely on economies of scale, data-driven economies of scope, high-quality algorithmic systems, and strong network effects that frequently promote winner-take-most markets. Their market dominance has generated competition concerns that appear difficult to assess with traditional merger policy tools. This paper examines the acquisition strategies of the five major U.S. platforms—Google, Amazon, Facebook, Apple, and Microsoft— since their inception. We discuss the main merger and acquisition theories of harm and how these operate differently than in the past. To address merger and acquisition concerns of multi-sided platforms, we develop four proposals that incorporate (i) a new ex ante regulatory framework, (ii) an update of the conditions under which the notification of mergers should be compulsory and the burden of proof should be reversed, (iii) differential regulatory priorities in investigating horizontal versus vertical acquisitions, and (iv) an update of competition enforcement tools to increase visibility into market data and trends.

On the (Un)Feasibility of Fedcoin: Implementing a Central Bank Backed Digital Currency in the United States

The rise of cryptocurrencies has sparked a global discussion on central bank backed digital currencies (CBDCs). In a 2014 blog post, J.P. Koning proposed that the Federal Reserve launch its own blockchain based digital currency: Fedcoin. While the technology behind cryptocurrencies was supposed to liberate monetary policy from central bank control, it might instead be the key to strengthening the Federal Reserve’s power. In the post-crisis era of excess reserves and low inflation, the Federal Reserve’s traditional monetary policy tools of open market operations and reserve requirements break down, leading to a dependence on new or unconventional policies such as quantitative easing, forward guidance, and the interest rate on reserves. Fedcoin could be a powerful new monetary policy tool which gives the Federal Reserve a direct transmission mechanism by setting interest rates on Fedcoin – a tool which many have touted as a solution to the zero-lower bound. Many impediments stand in the way of Fedcoin’s implementation, however, including the Mundell-Fleming policy trilemma, dependence on cash in the United States, displacement of the banking sector, and the Federal Reserve’s statutory mandate. This paper looks at law, economics, and technology to discusses Fedcoin design considerations, including: 1) the desirability and mechanics of implementing Fedcoin as a DLT-based token, 2) the monetary policy implications under economic theory, 3) feasibility of Fedcoin’s adoption and moving towards a cashless society and 4) the Federal Reserve's statutory authority to create a digital currency.

How Behavioral Interventions Can Reduce the Climate Impact of Energy Use

Kristian S. Nielsen is a research associate in the Department of Zoology at University of Cambridge. He received a PhD from Copenhagen Business School in 2019 with a dissertation focused on the role of self-regulation in environmental behavior change. His current research focuses on bridging research in behavioral science and biodiversity conservation as part of an interdisciplinary project called Nudging for Nature. His other research interests revolve around behavior change as a climate change mitigation strategy, the dynamics of the behavior change process, self-regulation and self-control, and sustainable clothing consumption. Sander van der Linden is Reader in Social Psychology in Society and director of the Cambridge Social Decision-Making Lab in the Department of Psychology at the University of Cambridge. He is also a fellow in Psychological and Behavioral Sciences at Churchill College, Cambridge and the editor-in-chief of the Journal of Environmental Psychology. His research on the psychology of human judgment and decision-making, especially in the context of climate change, has received numerous awards including the Rising Star award from the Association for Psychological Science and the Sage Early Career Award from the Society for Personality and Social Psychology . Paul C. Stern is president of the Social and Environmental Research institute and was previously a principal staff officer at the US National Academy of Science, Engineering, and Medicine where he directed its Board on Environmental Change and Society. He is a fellow of the American Association for the Advancement of Science and the American Psychological Association. His research interests include the integration of social science into research and practice for governing environmental change and into risk assessment and management. Among his publications are Environmental Problems and Human Behavior (coauthor) and Understanding Risk: Informing Decisions in a Democratic Society (coeditor).

Державна мовна політика в Україні: зміст та підходи до реалізації

Доведено необхідність державного регулювання мовних питань, законодавчого закріплення державної мови та запровадження механізмів реалізації цієї політики на всіх рівнях управління. Уточнено низку понять, таких як “державна мовна політика”, “державне регулювання мовних питань”, “механізми формування та реалізації мовної політики”. Розглянуто можливість та доцільність використання сучасних інструментів та технологій реалізації мовної політики, серед яких: зв’язки з громадськістю, або PR, соціальна реклама, мовний маркетинг тощо.

Doing More with Less: Leveraging Social Norms and Status Concerns in Encouraging Conservation Farm Practices

Engagement in conservation farm practices often lag behind what would be predicted by an analysis of economic returns. Our proposed explanation is that farmers’ decision to engage in such practices is a function of both profit and other non-monetary issues such as identity concerns. Through a number of novel experiments, we illustrate how identity-based utility can be harnessed to encourage pro-environmental behaviours. Specifically our findings illustrate how providing farmers with an opportunity to demonstrate their ‘green credentials’ as well the use of descriptive norms can encourage conservation practices. Interventions such as these can be a low cost and powerful supplement to traditional policy tools. New approaches for engendering behavioural change is likely to be particularly important in a UK context as the UK transitions out of the EU, and a new suite of agri-environmental initiatives will need to be developed if the UK is to maintain existing environmental standards.

The impact of Chinese monetary policy on co-movements between money and capital markets

ABSTRACTFrom 2010 to 2017, with interest rate liberalization and capital market development in China, the impact of monetary policies on China’s financial markets underwent continuous evolution. Using the DCC-GARCH model, this study investigates the transmission process of monetary policies from the money market to capital markets (stock and bond markets). The results show that in the early stage the instability of the money and stock markets and the downturn in the bond market are primarily caused by the block of monetary policy transmission and the paucity of fund sources in the capital markets. Subsequently, the outbreak of the 2013 money shortage and the 2015 stock market crash are also closely related to monetary policies. In the later periods, the money and stock markets maintain a low degree of correlation for a long time, reducing the impact of destabilizing factors on the stock market. By contrast, with the advancement of interest rate reform and the optimization of bond market structure, the bond market is highly relevant to the money market. The central bank regulates the bond market more effectively using both traditional and innovative monetary policy tools.