Monetary Policy and Expectations: Market-Control Techniques and the Bank of England, 1925–1931

1995 ◽  
Vol 55 (3) ◽  
pp. 612-636 ◽  
Author(s):  
John R. Garrett
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Open Market ◽  
Market Control ◽  
Market Portfolio ◽  
Bank Of England ◽  
Market Operation ◽  
Classical Models ◽  
Open Market Operation ◽  
Central Bankers

The Bank of England depleted its open-market portfolio by secretly sterilizing large gold inflows. Thereafter interest rates were influenced by manipulating reported gold flows. Expectations manipulation as a monetary policy channel is modeled and estimated. A gold flow falsification was over two-thirds as effective as an open-market operation. These results contradict accepted new classical models and suggest that credibility benefits from new classical policy are small, despite current popularity among central bankers. The episode supports Peter Temin’s view of interwar central bankers as nonstabilizers and enforcers of a dysfunctional classical orthodoxy.

scholarly journals Chinese Private Lending Risk and Monetary Policy Operating

2016 ◽  
Vol 2 (2) ◽  
pp. 34 ◽  
Author(s):  
Guangning Tian ◽  
Kaiyan Li
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Financial Risk ◽  
Risk Control ◽  
Open Market ◽  
Credit Policy ◽  
Empirical Results ◽  
Market Operation ◽  
Private Lending ◽  
Open Market Operation

The private lending risk was more likely expressed as the forms of various funding raising disputes, which originated from the borrowers’ solvency problems. Whether the change of monetary policy had an impact on the civil financial risk and how much of the influence were worth of consideration. Based on the analysis of how monetary policy operated on the private lending risk, we took some key data, such as the amount, the involved number and the interest rates deprived from the private lending disputes cases happened in our country from 2003 to 2014, to construct the model between the index of private lending risk and the monetary policy variables. Also we need to explore the inner relationship between them. The empirical results show that the monetary policy tools do have an impact on the private lending risk to some different degree. More specifically, the implication for the monetary policy operations is that we should not use the deposit reserve policy and the credit policy more frequently, while the rediscount policy and the open market operation have more advantage on the balance of macroeconomic regulation and the private lending risk control.

scholarly journals KETERKAITAN INSTRUMEN KEBIJAKAN MONETER DENGAN NERACA PEMBAYARAN DI INDONESIA

2020 ◽  
Vol 3 (1) ◽  
Author(s):  
Indra Maipita
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Policy Instruments ◽  
Balance Of Payments ◽  
Open Market ◽  
Close Link ◽  
Macroeconomic Variables ◽  
Policy Variable ◽  
Market Operation ◽  
Open Market Operation

This study aims to determine the monetary policy variable linkages with Indonesia's balance of payments. Using svar and IRF analysis found that the level of α = 0.05, variable monetary policy instruments such as open market operation (OPT), the minimum reserve requirement (GWM), and the discount rate (rDisk) has a significant relationship with the variable balance of payments (BOP) . In fact, all the macroeconomic variables also significantly affect the balance of payments variables, except the variable domestic interest rates. This means that there is a close link between monetary policy instruments with the balance of payments in Indonesia in the period of the study.

scholarly journals MONETARY POLICY IN AN ISLAMIC ECONOMICS

2021 ◽  
Vol 9 (5) ◽  
pp. 315-326
Author(s):  
Bismi Khalidin
Keyword(s):  
Monetary Policy ◽  
Discount Rate ◽  
General Concept ◽  
Economic Systems ◽  
Open Market ◽  
Holy Quran ◽  
Market Operation ◽  
The Holy Quran ◽  
Open Market Operation ◽  
The Stability

The primary aim of this paper is to elucidate the general concept of monetary policy under Islamic Economics. Not only does the stability of but also the growth of the economy in a country strongly depends upon monetary policy implemented. Such the phenomenon also prevails in Islamic Economics in which the term is also ruled by the Holy Quran and the Hadith of the Prophet. Moreover, the Prophet issued some regulations regarding monetary, such as to adopt Dinars and as the Islamic currencies. It is noted that, however, the thing distinguishing between Islamic Economics and other economic systems the variable of interest or usury, where either the Holy Quran or the Hadith clearly states that it is banned. Due to using interest as the yardstick, the conventional monetary instruments such as Open Market Operation, Discount Rate and the likes are not considered as the monetary instruments under Islamic Economics. Therefore, Instead of interest, Islamic Economics adopts Profit Loss Sharing (PLS) system, regarded as the important part of monetary policy. Moreover, Islamic Economics has also its specific monetary standard and instruments, which are far from interest or variables, such as certificates and others.

scholarly journals Monetary Policy Its Instruments and Convergence of Its Objectives: Case of Angola 2005/2017

2019 ◽  
Vol 5 (2) ◽  
pp. 161
Author(s):  
Antonio, Pitshu Massaka
Keyword(s):  
Monetary Policy ◽  
Policy Instruments ◽  
Multiple Linear Regression Model ◽  
Economic Thought ◽  
Policy Framework ◽  
Open Market ◽  
New Paradigm ◽  
Keynesian Model ◽  
Market Operation ◽  
Open Market Operation

<p><em>This paper proposes a new paradigm for the analysis of monetary policy, and presents the monetary policy framework in Angola which includes the policy instruments, and implementation mechanism the way between instrument and objective.<strong> </strong>To study the Monetary Policy instruments in Angola based on a multiple linear regression model. Before the model was conceived an analogy was made about the politics and instruments of monetary policy from the classical Keynesian model in the matter, but also less important also to analyze the concrete objective of monetary policy if the authors agree connected with those currents of economic thought. For the estimation of the equation for the monetary aggregate M2 that represents the money supply by the Central Bank in Angola The author applied the current implementation and the existing theories to display the Angola monetary tools such as basic interest rate for monetary policy orientation (tbna), open market operation, Lending Facility, coefficient of required reserve, net international reserves, and the Gross Domestic Product, the reference oil price to brent. Most of the variables present the expected results.</em></p>

Monetary Policy Instruments and Bank Risks in China

2013 ◽  
Vol 4 (2) ◽  
pp. 57-71
Author(s):  
Zhongyuan Geng ◽  
Xue Zhai
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Policy Instruments ◽  
Bank Risk ◽  
Open Market ◽  
Reserve Requirement ◽  
Market Operation ◽  
Open Market Operation ◽  
The Interest Rate ◽  
Bank Risks

The authors use a panel data regression model to examine the effects of main monetary policy instruments on commercial bank risks in China from 1998 to 2011. The interest rate has a positive effect on bank risk while the interest rate margin, the reserve requirement ratio and open market operation have a negative effect. Among the three monetary policy instruments, the reserve requirement ratio has the greatest effect on bank risk, the interest rate (the interest rate margin) the second largest and the open market operation the weakest. Their findings provide guidance to the monetary authority and regulatory authorities in monetary policy and banking regulation in China.

Monetary Policy Instruments and Bank Risks in China

2014 ◽  
pp. 518-531
Author(s):  
Zhongyuan Geng ◽  
Xue Zhai
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Policy Instruments ◽  
Bank Risk ◽  
Open Market ◽  
Reserve Requirement ◽  
Market Operation ◽  
Open Market Operation ◽  
The Interest Rate ◽  
Bank Risks

The authors use a panel data regression model to examine the effects of main monetary policy instruments on commercial bank risks in China from 1998 to 2011. The interest rate has a positive effect on bank risk while the interest rate margin, the reserve requirement ratio and open market operation have a negative effect. Among the three monetary policy instruments, the reserve requirement ratio has the greatest effect on bank risk, the interest rate (the interest rate margin) the second largest and the open market operation the weakest. Their findings provide guidance to the monetary authority and regulatory authorities in monetary policy and banking regulation in China.

Crafting Consensus

2020 ◽  
pp. 1-18
Author(s):  
Nicole Baerg
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Information Aggregation ◽  
Policy Statement ◽  
Single Individual ◽  
Open Market ◽  
Federal Open Market Committee ◽  
Policy Makers ◽  
Monetary Policy Committee ◽  
Central Bankers

This chapter introduces central bankers as “wordsmiths,” skilled users of words, who work together to construct and edit a monetary policy statement with an intention to drive the economy by shaping the public’s beliefs about the future. The chapter starts off showing that central bankers can be both relatively vague and relatively precise with the language that they use. Baerg highlights previous explanations on the benefits of delegating monetary policy to a monetary policy committee rather than to a single individual. Known benefits include better information aggregation and problem-solving. The author introduces the argument that monetary policy committees that have diverse policy preferences are more likely to be precise and illustrates, using examples from Federal Open Market Committee (FOMC) transcript data, how policy makers bargain over the policy statement in ways similar to how they negotiate changes in interest rates. The chapter concludes with a brief overview of the structure of the manuscript.

scholarly journals An Analysis of Monetary Policy in Controlling the Monetary Assets in Pakistan: A Money Multiplier Approach (1971-72 to 1989-90)

1993 ◽  
Vol 32 (4II) ◽  
pp. 1043-1054 ◽  
Author(s):  
Kalbe Abbas ◽  
Muhammad Ali Qasim
Keyword(s):  
Monetary Policy ◽  
Commercial Banks ◽  
Open Market ◽  
Beneficial Effects ◽  
Bank Rate ◽  
Indirect Measures ◽  
Market Operation ◽  
The Government ◽  
Open Market Operation ◽  
Monetary Assets

Besides fiscal policy, monetary policy is designed to attain sustained economic growth and to contain inflation within manageable limits. Usually monetary policy is pursued through variations in money supply in accordance with the requirement of output level and employment on one hand and price stability on the other. In Pakistan monetary policy is formulated to control total monetary assets keeping in view the projected growth rate of GDP, monetisation of the economy and the likely surplus or deficit in the country's international account. Once the safe limit of total monetary assets is determined it is then realised through different indirect measures, namely, the liquidity ratio, reserve requirements and the bank rate. l?rior to 1972 credit was controlled by these indirect measures. However, the separation of the Eastern wing and the two oil shocks of the early 1970's indicated the shortcomings of indirect methods when they failed to cope with the new situation. The open market operation could not be materialised due to marginal or nominal demand of government securities. The credit budgeting measure was introduced in 1972, replacing the old one, wherein the principal instrument is the credit ceiling for the commercial banks and they are bound to allocate credit to the priority sectors as determined by the government. Credit budgeting has proved to be an effective instrument of monetary policy both as a means of providing necessary funds for the development process and for curbing the increasing trends in prices. The credit ceiling with· its beneficial effects also has some adverse effects for example, commercial banks have little incentive in mobilising deposits, and their ability to respond to demand becomes extremely limited. The response of the public and commercial banks, to a certain extent, depend upon the credit ceilings determined by the monetary authority.

scholarly journals ANALISIS KETERKAITAN INSTRUMEN KEBIJAKAN MONETER, DEFISIT ANGGARAN, DAN NERACA PEMBAYARAN INDONESIA TAHUN 2002 - 2017

2020 ◽  
Vol 2 (2) ◽  
pp. 36
Author(s):  
Orlandio Jeremy
Keyword(s):  
Monetary Policy ◽  
Money Supply ◽  
Policy Instruments ◽  
Secondary Data ◽  
Balance Of Payments ◽  
Open Market ◽  
Budget Deficits ◽  
Reserve Requirement ◽  
Market Operation ◽  
Open Market Operation

This study aims to analye the linkages of monetary policy instruments, budget deficit and balance of payments with VECM method. This study used secondary data from 2002 quarter I to 2017 quarter IV.            The result found one-way interaction between open market operation with Indonesian balance of payments. Money supply has two-way causality relationship with budget deficits and minimum reserve requirement. The exogenous variable which are BI rate and open market operation affected Indonesian’s balance of payments with  positive correlation, while the minimum reserve requierment significantly affect Indonesian’s balance of payments with negative correlation. Impulse response found shock of money supply respond to balance of payments positive in the fourth period.This result show that Indonesia’s balance of payments is a monetary phenomenon. So monetary policy instruments BI rate, minimum reserve requirement and open market operation can be used to maintain the stability of Indonesia’s balance of payment.

scholarly journals South Africa’s economic response to monetary policy uncertainty

2017 ◽  
Vol 44 (2) ◽  
pp. 282-293 ◽  
Author(s):  
Mehmet Balcilar ◽  
Rangan Gupta ◽  
Charl Jooste
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Stochastic Volatility ◽  
Stochastic Volatility Model ◽  
Economic Consequences ◽  
Policy Uncertainty ◽  
Dsge Model ◽  
Content Type ◽  
Volatility Model ◽  
Central Bankers

Purpose The purpose of this paper is to study the evolution of monetary policy uncertainty and its impact on the South African economy. Design/methodology/approach The authors use a sign restricted SVAR with an endogenous feedback of stochastic volatility to evaluate the sign and size of uncertainty shocks. The authors use a nonlinear DSGE model to gain deeper insights about the transmission mechanism of monetary policy uncertainty. Findings The authors show that monetary policy volatility is high and constant. Both inflation and interest rates decline in response to uncertainty. Output rebounds quickly after a contemporaneous decrease. The DSGE model shows that the size of the uncertainty shock matters – high uncertainty can lead to a severe contraction in output, inflation and interest rates. Research limitations/implications The authors model only a few variables in the SVAR – thus missing perhaps other possible channels of shock transmission. Practical implications There is a lesson for monetary policy: monetary policy uncertainty, in isolation from general macroeconomic uncertainty, often creates unintended adverse consequences and can perpetuate a weak economic environment. The tasks of central bankers are incredibly difficult. Their models project output and inflation with relatively large uncertainty based on many shocks emanating from various sources. It matters how central bankers react to these expectations and how they communicate the underlying risks associated with setting interest rates. Originality/value This is the first study that looks into monetary policy uncertainty into South Africa using a stochastic volatility model and a nonlinear DSGE model. The results should be very useful for the Central Bank as it highlights how uncertainty, that they create, can have adverse economic consequences.

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