scholarly journals How does monetary policy and private sector credit interact in a developing economy?

2016 ◽  
Vol 10 (2) ◽  
pp. 92-100 ◽  
Author(s):  
Kalu O. Emenike
Keyword(s):  
Monetary Policy ◽  
Private Sector ◽  
Developing Economy

scholarly journals Measuring the Effect of the Zero Lower Bound on Medium- and Longer-Term Interest Rates

2014 ◽  
Vol 104 (10) ◽  
pp. 3154-3185 ◽  
Author(s):  
Eric T. Swanson ◽  
John C. Williams
Keyword(s):  
Monetary Policy ◽  
Fiscal Policy ◽  
Lower Bound ◽  
Private Sector ◽  
Interest Rates ◽  
Zero Lower Bound ◽  
Short Term ◽  
Macroeconomic Models ◽  
Monetary And Fiscal Policy ◽  
Effectiveness Of Monetary Policy

According to standard macroeconomic models, the zero lower bound greatly reduces the effectiveness of monetary policy and increases the efficacy of fiscal policy. However, private-sector decisions depend on the entire path of expected future short-term interest rates, not just the current short-term rate. Put differently, longer-term yields matter. We show how to measure the zero bound's effects on yields of any maturity. Indeed, 1- and 2-year Treasury yields were surprisingly unconstrained throughout 2008 to 2010, suggesting that monetary and fiscal policy were about as effective as usual during this period. Only beginning in late 2011 did these yields become more constrained. (JEL E43, E52, E62)

scholarly journals MONETARY POLICY, HOUSING BOOMS, AND FINANCIAL (IM)BALANCES

2012 ◽  
Vol 17 (4) ◽  
pp. 830-860 ◽  
Author(s):  
Sandra Eickmeier ◽  
Boris Hofmann
Keyword(s):  
Monetary Policy ◽  
Private Sector ◽  
Global Financial Crisis ◽  
House Prices ◽  
Monetary Policy Shocks ◽  
Balance Sheets ◽  
Vector Autoregressive ◽  
Policy Shocks ◽  
The Global Financial Crisis

This paper applies a factor-augmented vector autoregressive model to U.S. data with the aim of analyzing monetary transmission via private sector balance sheets, credit risk spreads, and house prices and of exploring the role of monetary policy in the housing and credit boom prior to the global financial crisis. We find that monetary policy shocks have a persistent effect on house prices, real estate wealth, and private sector debt and a strong short-lived effect on risk spreads in money and mortgage markets. Moreover, the results suggest that monetary policy contributed considerably to the unsustainable precrisis developments in housing and credit markets. Although monetary policy shocks contributed discernibly at a late stage of the boom, feedback effects of other (macroeconomic and financial) shocks via lower policy rates kicked in earlier and appear to have been considerable.

Segment reporting in a developing economy: the Indian banking sector

2017 ◽  
Vol 25 (1) ◽  
pp. 127-147 ◽  
Author(s):  
Jacqueline Birt ◽  
Mahesh Joshi ◽  
Michael Kend
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Banking Sector ◽  
Value Relevance ◽  
Emerging Market ◽  
Developing Economy ◽  
Content Type ◽  
Share Prices ◽  
Segment Reporting ◽  
Public Sector Banks

Purpose The purpose of this paper is to investigate the value relevance of segment information for both public and private sector banks in India. In doing so, this paper examines a rapidly developing economy and perhaps its most critical sector during this period of strong economic growth. Design/methodology/approach In this study uses the simplified Ohlson model, for a sample of 136 private sector and public sector banks for the period 2007-2010 in India. Findings The paper finds that public sector banks have higher share prices, higher earnings and more equity compared with private sector banks. Segment earnings data is highly value relevant for both sectors; however, segment equity data is only marginally value relevant for Indian banks. The number of segments is also value relevant and associated with higher share prices. Originality/value The results of this study contribute additional evidence to the literature on segment reporting by studying the effect of adoption of segment reporting in an emerging market. Findings from the paper are particularly relevant as India is currently in the process of changing its segment reporting requirements and moving to an IFRS-based segment standard.

scholarly journals Robustly Optimal Monetary Policy with Near-Rational Expectations

2010 ◽  
Vol 100 (1) ◽  
pp. 274-303 ◽  
Author(s):  
Michael Woodford
Keyword(s):  
Monetary Policy ◽  
Private Sector ◽  
Central Bank ◽  
Optimal Policy ◽  
Rational Expectations ◽  
Stabilization Policy ◽  
Optimal Monetary Policy ◽  
Inflation Target ◽  
Model Consistency ◽  
Long Run

The paper considers optimal monetary stabilization policy in a forward-looking model, when the central bank recognizes that private sector expectations need not be precisely model-consistent, and wishes to choose a policy that will be as good as possible in the case of any beliefs that are close enough to model-consistency. It is found that commitment continues to be important for optimal policy, that the optimal long-run inflation target is unaffected by the degree of potential distortion of beliefs, and that optimal policy is even more history-dependent than if rational expectations are assumed. (JEL C62, D84, E13, E31, E32, E52)

scholarly journals The Power of Narratives in Economic Forecasts

2020 ◽  
Vol 2020 (001r1) ◽  
pp. 1-58
Author(s):  
Steven A. Sharpe ◽  
◽  
Nitish R. Sinha ◽  
Christopher A. Hollrah ◽  
◽  
...  
Keyword(s):  
Monetary Policy ◽  
Private Sector ◽  
Stock Returns ◽  
Economic Performance ◽  
Federal Reserve ◽  
Strongly Correlated ◽  
Quantile Regressions ◽  
Incremental Information ◽  
Economic Forecasts

The sentiment, or “Tonality”, extracted from the narratives that accompany Federal Reserve economic forecasts is strongly correlated with future economic performance, positively with GDP and negatively with unemployment and inflation. Moreover, Tonality conveys incremental information in that it predicts errors in both Federal Reserve and private-sector forecasts of GDP, unemployment, and monetary policy up to four quarters out. Tonality similarly predicts stock returns. Tonality is most informative when uncertainty is high and point forecasts predict subpar growth. Quantile regressions indicate that much of Tonality’s forecasting power arises from its signal of downside risks to economic performance and stock returns.

China’s monetary policy will rely on banks’ compliance

2019 ◽  
Keyword(s):  
Monetary Policy ◽  
Private Sector ◽  
Interest Rates ◽  
Financial System ◽  
Fourth Quarter ◽  
Gdp Growth ◽  
Private Firms ◽  
Content Type

Significance China’s GDP growth slowed to 6.4% year-on-year in the fourth quarter of 2018, with full-year growth at 6.6%. The PBoC is loosening monetary policy to support growth by lowering banks’ RRR alongside policies to incentivise banks to lend more to the private sector. Impacts If the policy fails and leverage increases relative to GDP, then risk in the financial system will rise. If RRR cuts cause consumption to increase, China’s trade surpluses are likely to decrease, helping ease trade tensions with Washington. Liberalising interest rates will, when it eventually happens, allow banks to price loans to private firms more accurately.

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