Unconventional Instruments Research Articles

UKRAINE’S MONETARY POLICY UNDER MARTIAL LAW

The relevance of the research is due to the change in the monetary policy regime of the National Bank of Ukraine (NBU), which consists in the transition from inflation targeting with a floating exchange rate to a fixed exchange rate as the nominal anchor of monetary policy under martial law. Such a plan to change the monetary policy regime was carefully calculated and outlined in the NBU's Monetary Policy Guidelines for the Duration of Martial Law. The timeliness and effectiveness of the NBU's monetary policy decisions enabled it to mitigate the impact of the military shock on the macro-financial stability of the national economy. The purpose of the article is to consider the theoretical and practical aspects of the NBU's monetary policy under martial law. Methodology. The study uses a systematic method of cognition to determine the sequence of application of monetary policy instruments to smooth out monetary shocks of the wartime period; an abstract-logical method to understand the future monetary policy strategy based on the abandonment of the fixed exchange rate regime and a gradual return to inflation targeting; and a statistical method to analyse the dynamics of monetary indicators of the national economy. Results. The paper presents the main principles of the NBU's monetary policy under martial law. The first shock from the war led to changes in the conduct of monetary policy and a shift to unconventional instruments of its regulation. The gradual adaptation of the economy to the new conditions determined the NBU's further steps to ease monetary policy and move to greater exchange rate flexibility. Practical implications. The practical significance of the research results is to assess the conditions for the transition from the key policy rate-based inflation targeting regime as the main monetary policy instrument to the use of foreign exchange interventions as the main operation in the foreign exchange market under martial law. Value / Originality. The originality of the article is due to the need to identify the prerequisites for the transition to a new monetary policy strategy in a wartime economy. Conclusions. The NBU's timely response to the negative phenomena associated with deteriorating inflation expectations, multiple exchange rates and pressure on international reserves helped prevent the development of a currency and financial crisis in Ukraine. Despite the active hostilities, the NBU is trying to find options that will allow it to conduct an effective monetary policy in the face of a full-scale invasion and unprecedented internal and external shocks. Internationally, Ukraine has exceeded expectations and the NBU has shown a high degree of responsibility, professionalism and creativity in the conduct of monetary policy. Increased confidence in the central bank is a valuable resource in times of martial law.

Analysis of Hybrid Warfare Elements in the 2023 Asymmetric War between Hamas and Israel

The conflict between Hamas and Israel has created a complex asymmetric warfare environment, giving rise to elements of hybrid warfare involving both military and non-military tactics. Hybrid warfare is not a new idea. The focus is primarily on the ability to target distant objects and processes through unconventional military methods, especially for state and military functions. Hybrid warfare, known as an asymmetric approach, seeks to achieve major impact using simple methods, such as stopping an enemy's military operations or cutting off public political support. The operational environment of hybrid warfare consists of a series of interrelated areas of conflict, such as military, economic, social, information, diplomatic, trade, science, and technology. Since states involved in hybrid war do so by undertaking centralized actions in all areas of conflict subject to a single goal, it follows that the actions undertaken by states involved in hybrid war must also be centralized in all areas. Hybrid warfare requires both conventional and unconventional instruments of power and means of subversion. This research aims to analyze the elements of hybrid war in the context of an asymmetric war between Hamas and Israel in 2023.

MONETARY POLICY OF THE EUROPEAN CENTRAL BANK IN THE CONTEXT OF COUNTERACTION TO CRISES IN THE FINANCIAL MARKET

Introduction. During the crisis monetary policy acts as the most important tool of influence on the economy through monetary levers, and therefore the functioning of the central bank serves as the institutional basis and foundation of the entire anti-crisis architecture within the framework of the state economic policy. The emergence of objective limitations to the effectiveness of traditional instruments of monetary regulation determines the need to compensate them with other levers of monetary influence aimed at maintaining proper economic activity and stimulating economic growth. Therefore, it is important to evaluate the work of the European Central Bank as the leading eurozone regulatory institution, whose monetary policy, despite all the problematic aspects, proves the success of its conventional and unconventional instruments. The purpose of the article is to study the experience of the European Central Bank in the construction of an effective mechanism of monetary regulation as an essential component of the state policy to overcome the consequences of crisis on financial markets and stabilize economic and social development. Results. The key aspects of functioning of the European Central Bank as the main eurozone regulator of economic processes are analyzed. The main periods of the implementation of the ECB's monetary policy are considered and systematized, characterizing a sequence of applying certain tools of monetary regulation at each of them and setting priorities for choosing the appropriate goals of monetary influence on the economy. Particularly noted are the trends that emerged during financial crisis and pandemic crisis in the eurozone and determined the need to expand the mandate of the European Central Bank by influencing not only price dynamics, but also maintaining the financial stability of the banking sector and facilitating the functioning of businesses and households. Objective economic preconditions are determined under which the ECB was forced to resort to the use of new instruments of monetary regulation. Conclusions. Based on the experience of the ECB's monetary policy, the need to expand the mandate of monetary regulation and the optimal combination of traditional and non-traditional central bank instruments for the implementation of large-scale measures of financial support for the banking system and the real sector of the economy is substantiated. Perspectives. As an important direction of future scientific researches should be considered the analysis of further ways to expand and optimize the monetary regulation tools at the disposal of central banks in order to successfully counteract the crises in the economy.

Sectoral Special Taxes in Hungary as Instruments of a Populist Fiscal Policy: A Legal Analysis

Abstract In order to meet a variety of locally relevant socio-economic expectations and needs, Hungarian tax policy in the last decade has applied a number of unconventional instruments. The government favored in particular the imposition of additional taxes on corporate taxpayers in specific sectors of the national economy. The taxation of turnover in addition to corporate profits has proved to be a particularly attractive idea. These measures pursue declared objectives which any national government that is faithful to its political mandate could endorse as its own. However, the design of these taxes and their related regulatory hiatuses, which have been subject to extensive scrutiny before the courts of the European Union, raise the possibility of their abusive and discriminatory use to the disadvantage of select individuals, in particular non-national corporate taxpayers. This element of contemporary Hungarian tax policy may well be considered as forming part of the government’s populist policy agenda.

Monetary policy transformation of major central banks during the COVID-19 pandemic

The paper aims to assess the scope, effectiveness and key instruments of monetary policy in advanced and emerging markets during the first wave of the COVID-19 pandemic. The methodological basis of the study was the reports of the central banks of the sample countries and the data of international organizations and financial market participants on monetary policies. The author assesses the scope of financial support for the economy by the central banks of the largest advanced and emerging markets during the crisis, including the size and share of quantitative easing in its total volume. The study identifies and characterizes the main groups of monetary policy measures during the COVID-19 pandemic, and also shows the monetary policy differences of advanced and emerging economies during the pandemic. The paper highlights larger direct financial support from the central banks of advanced countries. The difference in monetary policy instruments is that advanced economies use traditional monetary policy measures while emerging economies widely apply unconventional monetary policy instruments, primarily quantitative easing. The article presents a preliminary assessment of the effectiveness of monetary policy in China and Russia. The author concludes that the consequences of the monetary policy pursued by advanced countries in 2020 may lead to long-term stagnation in these countries and the rapid recovery of emerging markets due to the inflow of speculative capital from advanced countries. The study provides a post-pandemic forecast of the general direction of monetary policy and its driving factors. Enormous direct financial support, primarily through quantitative easing, from the central banks of advanced countries in 2020 had a positive impact on the economy in the short run, but the long-term consequences of such policies require further research.

The Impact of Money Supply M1 on Balance Exchange Rate of The Iraqi Dinar

The Economic literature demonstrates that established nations' monetary policies may significantly impact almost all economic indices in emerging markets. First, the purpose of this article is to evaluate the possible effects of fiscal and monetary policy on Iraq's balance of payments. Second, the paper examines how these exchange rates are priced during an expansionary monetary policy phase to understand better how unconventional instruments impact them. The analysis indicates that the Iraqi economy became burdensome with the various economic problems represented by high inflation rates, high volume of external indebtedness, and deterioration of the exchange rate of the Iraqi dinar and others. The results also reveal the mismanagement of the ruling regime, whose decisions focused on strengthening the fragile pillars of its rule. The decisions made were political before they were economical and targeted the regime's interests before they were aimed at the interests of the economy.

Un “selfie” in dialisi: valutazione delle abitudini personali degli infermieri di un centro dialisi

Introduction: Healthcare workers represent a population that is well analysed by health studies: since 1976, the Nurses’ Health Study has been examining American nurses for health-related risks and is currently recruiting its third cohort. The survey models used are predominantly biomedical, i.e. based on the disease-healing scheme which focuses on purely biological factors with little or no assessment of psychological, behavioural and environmental aspects. The biopsychosocial assessment model, in its multifaceted nature, is probably more suitable for assessing occupational distress as a progressive cause of health worker burnout. It attributes the outcome of illness, as well as that of health, to the numerous, complex interactions of biological, psychological and social factors. In this work, we decided to evaluate the lifestyle and habits of a homogeneous population of nurses, all belonging to an Operative Unit of Nephrology (Pistoia). Methods: We decided to use unconventional instruments: a “selfie” questionnaire on habits, constructed with scientifically validated items, aimed at the self-assessment of habits, scientifically recognised as determinants of health (nutritional, behavioural, relational, physiological...), correlating it with the analysis of the receipts of the weekly shopping of the family unit of the nurse in the study, according to the principle that “we eat what we buy”. Results and conclusion: Nurses evaluated in the study showed a frequent unhealthy lifestyle which can have negative effects on their health, on their family and, consequently, on their work environment. Questionnaire and focus group discussions were appreciated and potentially useful and effective in changing bad habits.

Effects of Expansionary Monetary Policy on Agricultural Commodities Market

Agricultural commodities experienced a rise in prices during the first decade of the 2000s. The literature shows that the monetary policies adopted by developed economies can influence practically all economic indicators of developing markets. This paper aims to evaluate the effect of selected monetary policy measures on the prices of three selected agricultural commodities: soy, corn and sugar. Secondly, the study analyzes the price formation of these commodities during a period of expansionary monetary policy, in order to better understand how they are influenced by unconventional instruments. The central hypothesis is that the excessive liquidity created by the FED spills over to emerging economies, boosting investment and consumption there and, lastly, causing a commodity cycle. Our data (January 2000–December 2019) support this hypothesis and prove that expansionary monetary policy is capable of impacting agricultural commodities’ prices, but by different channels, due to the specificities of each commodity. The fact that people have more capital due to the credit obtained from loans seems to influence the price of sugar; soy is highly influenced by exchange rates of emerging markets, and corn is not very responsive to the used variables, which might be due to the high production rates of this commodity in the U.S. and the protectionist policies adopted by the government.

Hidden Blemish in European Law: Judgements on Unconventional Monetary Programmes

This article studies the hidden blemishes of two benchmark rulings of the European Court of Justice (ECJ). In 2015 and 2018, the ECJ approved two unconventional monetary instruments, among others ‘Outright Monetary Transactions’ and the ‘Public Sector Purchase Program’. Yet, there is a vigorous debate about both monetary operations in law and economics. In this interdisciplinary article, we address law and economic arguments in order to elucidate insights to the legal community. In particular, we elaborate on the legal implications of a variety of concerning issues such as public policy interference, effect on wealth redistribution, erosion of democratic legitimacy and lack of effectiveness of monetary policy. These topics remain disregarded in the ECJ rulings. Consequently, the verdicts do not identify the economic boundaries of the European Central Bank’s mandate appropriately.

Measuring welfare states beyond the three worlds: Refining state‐of‐the‐art tools

AbstractThe past decades saw the expansion of the geography of comparative welfare state research beyond the three worlds embracing a heterogeneous set of mainly middle‐income countries. In response, two leading state‐of‐the‐art tools for measuring welfare states through social rights, Social Citizenship Indicators Program (SCIP) and Comparative Welfare Entitlements Dataset (CWED), integrated many new countries into their datasets. Comparative welfare state research has yet to address the extent to which these measurement tools originally developed for measuring classic welfare states work equally well for measuring welfare states beyond the three worlds. In this article, we explore a number of challenges these datasets face in measuring these new cases. These challenges, we believe, stem from a set of key institutional characteristics widely prevalent in these welfare states. These characteristics are overt and hidden conditionalities, unconventional instruments, informal practices, nature of changes in statutory pension age and labour market characteristics of the representative worker. We propose a set of solutions to refine these datasets for comparing all cases, old and new. We conclude by drawing lessons for comparative research focusing not only on welfare states beyond the three worlds but also on the three worlds themselves.

Combining Negative Rates, Forward Guidance and Asset Purchases: Identification and Impacts of the ECB's Unconventional Policies

This paper provides new empirical evidence that bears on the efficacy of unconventional monetary policies when the main policy rate is negative. When a negative interest rate policy (NIRP) is deployed in concert with rate forward guidance (FG) and quantitative easing (QE), the identification of the impacts of these unconventional instruments of monetary policy is challenging. We propose a novel identification approach that seeks to overcome this challenge by combining a dense, controlled event study with forward curve counterfactuals that we construct using predictive rate densities derived from rate options. We find that NIRP has exerted a sizeable influence on the term structure of interest rates throughout maturities while, on net, the impact of rate FG has been more muted. QE explains the lion’s share of yield effects, particularly over the back end of the yield curve. We then feed these rate counterfactuals into a large-scale Bayesian VAR and generate alternative histories for the euro area macro-economy that one would likely have observed between 2013 and 2020 in no-NIRP (with or without FG) and in no-QE regimes. According to this conditional forecasting exercise, in 2019 GDP growth and annual inflation would have been 1.1 p.p. and 0.75 p.p. lower, respectively, and the unemployment rate 1.1 p.p. higher than they actually were, had the ECB abstained from using NIRP, FG and QE over the previous six years or so. JEL Classification: C32, C54, C58, E50, E51, E52

Gravity Among Central Bank Balance Sheets: Monetary Policy Spill-Over on FX Volatility

Abstract Following the subprime crisis, most of the European central banks implemented several unconventional monetary instruments. As a result of the late quantitative easing, there was a shift from stimulating lending to the immediate stimulation of the securities market in the monetary policy of the European Central Bank (ECB) and of the smaller central banks, too. These securities purchase programs, first and second-market transactions, and asset purchases have led to an increase in the stock of securities held by the central banks, whose spill-over effects have not been fully explored yet. The aim of our research is to identify the spill-over effects of the central banks’ unconventional instruments and quantitative easing on currency volatility while considering the relative size of the issuing central bank and the situation of small open economies. By running an adapted version of gravity models, we analyzed a sample of six European central banks and the ECB. Based on our results, the high volatility levels of European currencies around the eurozone have come from their relative smallness and unconventional monetary policy, and considerations about safe havens have a reducing power on F X volatility.

КРЕДИТНЕ ТА КІЛЬКІСНЕ ПОМ’ЯКШЕННЯ В СИСТЕМІ МОНЕТАРНОГО РЕГУЛЮВАННЯ В УМОВАХ ГЛОБАЛЬНОЇ НЕСТАБІЛЬНОСТІ: ДОСВІД РОЗВИНЕНИХ КРАЇН

The global financial crisis had a negative impact on the economic development of most countries in the world, and central banks had to overcome its consequences. In particular, negative indicators of GDP growth, low inflation were combined with high unemployment in most developed countries. The monetary authorities' response included a change in the monetary policy paradigm and the introduction of new instruments. The central banks of developed countries used unprecedented measures, which in the economic literature are called "unconventional monetary policy". In particular, credit and quantitative easing policies have become the most common. Credit easing policy allows a larger number of financial market participants to use credit funds on acceptable terms to stimulate the development of the real sector of the economy. During the period of credit easing policy, central banks of developed countries created additional financial funds. These measures led to an increase in lending to households and firms, which became one of the factors in overcoming the crisis and stimulating economic growth. Credit easing policies were especially popular in the early years following the 2008 global financial crisis. The quantitative easing policy is large-scale asset purchases in both the public and private sectors, which is the hallmark of unconventional monetary policy. These measures led to changes in the value of assets and lowered long-term interest rates. Both unconventional monetary policy instruments have been used by the Central Bank of England, the Bank of Japan, the European Central Bank, and the Federal Reserve. Overall, these unconventional measures helped to cope with the financial crisis and created conditions for the resumption of economic growth. These measures should become permanent instruments of monetary regulation of the country's economic development in conditions of uncertainty and instability. But unconventional instruments have a number of consequences that the monetary authorities need to control. Therefore, the next step in the development of monetary regulation should be the creation of conditions for the "normalization" of monetary policy. For example, It could be raising interest rates or applying macroprudential regulation. Only in this way, Central Bank will have the necessary tools for successful regulation of the economy and financial markets.

Exchange Rate Modeling under Unconventional Monetary Policy on a European Panel Sample

Following the latest subprime crisis, central banks introduced several unconventional instruments which had spillover effects on foreign exchange rates. The aim of our paper is to explore whether the use of zero lower bound (ZLB) and unconventional instruments has an impact on the changes in foreign exchange rates. By running dynamic panel regressions, we analysed this issue on a sample of 7 European central banks. Based on our results, unconventional monetary policy had a significant impact on the exchange rate fluctuations in the short term, even with the use of instruments where there was no targeted exchange rate regulation.

Forward guidance as a tool of the European Central Bank’s monetary policy

The purpose of this article is to take a closer look at one of the most unconventional instruments of monetary policy which is the Forward Guidance. This instrument is increasingly more often adopted by central banks. What is more, it is also used by the European Central Bank which implemented this approach for the first time in 2013.
 The first part of the article will be focused on presenting a theoretical approach of forward guidance, while the following part will describe examples of implementation of this instrument by the European Central Bank as the new way of communication with the market. The example of forward guidance use by the European Central Bank covers the way of communication of future monetary policy regarding the interest rates.
 The data presented in this paper shows a positive effect of the forward guidance approach. This method of communication has brought a clearer view of monetary policy adopted by the European Central Bank. Moreover it limited some uncertainty showed by the market participants regarding the level of future interest rates. The positive effects of the forward guidance lead not only to the continuous but also widespread use of this approach by the European Central Bank.

Market reactions to ECB policy innovations: A cross-country analysis

Regulators have been paying increasing attention to governing and steering market fluctuations, with their role in shaping the economic cycle being ever more crucial. The combined effect of the financial and sovereign debt crises, as well as the approach to the zero lower bound, has made actions even more pressing, forcing the European Central Bank to resort to unconventional instruments to revive the economies and counter deflationary pressures. By using a combined event study and panel regression methodology, we investigate whether European Monetary Union equity markets react heterogeneously to standard and non-standard European Central Bank policy innovations. Our results show that conventional policies unevenly affect financial indices in the Eurozone and, hence, are bound to generate asymmetries that reflect on real economies, while unconventional measures, albeit with different intensities, exercise a homogeneous pressure on all markets. Our evidence highlights the beneficial impact of unconventional measures and suggests that they can play a useful role even in non-crisis times.

Ecuador del boom a la crisis: política fiscal para postergar el ajuste

La emisión de deuda se convirtió en una importante fuente de ingresos del Ecuador a partir de 2016. El país venía experimentado una complicada situación fiscal desde el 2013 la cual se agravó cuando el precio del petróleo se desplomó y un terremoto de 7,8 grados golpeó el litoral. En este trabajo, mediante un análisis correlacional de las variables se emiten explicaciones e hipótesis acerca de la sostenibilidad fiscal, la calidad del gasto, y algunos instrumentos de financiamiento no convencionales. Se concluye que, a pesar del uso de estos instrumentos con el fin de postergar el ajuste, la situación fiscal es ya insostenible. Palabras clave: Fiscal, sostenibilidad, blanchard, ajuste, devaluación. URL: http://revistas.uta.edu.ec/erevista/index.php/bcoyu/article/view/665

Anti-crisis financial assistance as an element of financial system stability

Goal – The authors undertake to assess the scale and form of anti-crisis state assistance in the context of restoring the stability of the financial system in the EU. Such assistance is a form of intervention undertaken independently by EU Member States under the conditions of admissibility applicable in the EU. The applied instruments include: state aid (discussed in detail in this paper) and financial assistance on general terms applied in the form of unconventional instruments. The authors attempt to answer two basic questions: Was anti-crisis assistance necessary in the EU in order to maintain the stability of the financial system? What are the long-term consequences of implementing such measures at the EU level and in individual EU Member States?Research methodology – The study uses the method of analysis of partial phenomena and identification of causal changes occurring in the financial system. On this basis, theoretical inference is carried out allowing to determine whether the anti-crisis measures used by EU financial policy have brought tangible results for the financial system and the real economy. In order to formulate final conclusions, available statistical data and the results of research conducted on an international level are analyzed. Next, the current value of financial aid is estimated and the adopted assumptions and efficiency of the implemented instruments of state financial policy are analyzed and assessed.Score – In view of the objective and scope of the conducted research, it is expected that the obtained results will allow the authors to identify the scale of public aid and the assistance provided in the form of unconventional financial policy instruments implemented during the global financial crisis. This approach will make it possible to perform an appraisal of the use of selected mechanisms for stabilizing the financial system. The conducted research should enable the authors to assess the impact of anti-crisis aid on the state of public finances and the stability of the market financial system.

UNCONVENTIONAL INSTRUMENTS OF ORGANISATIONS’ DEVELOPMENT AND INTRODUCTION OF INNOVATIVE PRODUCTS INTO THE MARKET

The research topicality is caused by the fact that, under current economic conditions, bringing innovative products to market is becoming a serious challenge for commercial organizations. High competition, fast-changing audience needs, lack of resources are the tangible obstacles to the effective development of an innovation project. Besides, traditional business models are not working effectively under conditions of uncertainty. Rigid methods of business processes management, obsolete equipment and inefficiency of the staff, neglect of communication with the audience and other factors can lead to stagnation, loss of market position and even bankruptcy. So, today the number of unprofitable organizations in the Russian Federation and Kursk region is a quarter of the total number of operating commercial companies. The reason can be due to the pecularities of the Russian economy which has its own distinctive features inherited from the planned economic model of the twentieth century, and supplemented with management principles, peculiar to the Western market economic models. In this case, in our opinion, unconventional instruments of innovation development based on the creative approach to the generation and implementation of breakthrough ideas will have a positive impact on the effectiveness of an innovative organization under uncertainty conditions in competitive markets. The effectiveness of visual communication is also an important component of the successful introduction of an innovative product into the market. Correct communication with the core of target audience is intended to be the foundation for building a clear system of branding and corporate culture in the innovation ecosystem of an organization. This acquires special relevance in the light of the dynamic development of information technologies that today are indispensable tools of interaction both with consumers and with the staff and partners. The aim of the study is the analysis of theoretical propositions of innovation management, principles of creative destruction, the construction of effective visual communication in the framework of formation of innovative ecosystem of an organization and systematization of creative tools and approaches that contribute to the successful development and implementation of innovations. The study made use of theoretical and empirical methods, in particular: review of the literature, comparative, logical, and systematic analysis of innovation introduction tools, as well as factors indicating the importance of following the path of innovative development. The study has found that under conditions of uncertainty for successful bringing of innovative products to market and staying effective in the long term period, commercial organisations need to pay considerable attention to the construction of an efficient system of visual communication that will be the foundation for the formation of a unified system of branding and corporate culture.

Powrót do przedkryzysowej polityki pieniężnej a stabilność systemu finansowego

Faced with the financial crisis in 2008, the central banks used conventional monetary policy instruments. However, the problem of zero lower bond forced them to use unconventional monetary policy instruments - quantitative easing carried out as part of the so-called central bank balance sheet politics and relying on the buying by the central bank of di&erent kinds of financial assets - resulting in stabilization of the situation on financial markets in conditions of low long-term interest rates. Balance sheet totals of the central banks rose repeatedly. Their structure also changed. At present possible effects for the stability of the financial system of the return to the pre-crisis monetary policy are the topic of debate. The exit strategy is giving rise to a significant risks and the coordination of economic policy and the transparency of action taken by monetary authorities can only minimize possible negative effects