Monetary Policy Impacts and Regional Money Supply: Regional Differences

The article critically considers basic postulates of quantity theory of money. It shows that they reflect the static state of the economy in abstract models of market equilibrium but do not prove true in actual economic processes. In contrast to monetarists’ view, prices can rise as well as fall even if other variables of the monetarist equation are stable. Thus it cannot be used for grounding monetary policy. The author comes to the conclusion on the dogmatism of Russian monetary authorities that seriously hinders the country’s economic development. He proposes to switch to market organization of money supply basing on regulation of the refinancing rate.

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The Role of Different Channels in Transmitting Monetary Policy into Output and Price in Vietnam

Journal of Economics and Development ◽

10.33301/2015.17.01.02 ◽

2015 ◽

pp. 20-40

Author(s):

Vinh Nguyen Thi Thuy

Keyword(s):

Monetary Policy ◽

Exchange Rate ◽

Interest Rate ◽

Money Supply ◽

Monetary Transmission ◽

Impulse Response Functions ◽

Short Run ◽

The Exchange Rate ◽

The Interest Rate ◽

Interest Rate Channel

The paper investigates the mechanism of monetary transmission in Vietnam through different channels - namely the interest rate channel, the exchange rate channel, the asset channel and the credit channel for the period January 1995 - October 2009. This study applies VAR analysis to evaluate the monetary transmission mechanisms to output and price level. To compare the relative importance of different channels for transmitting monetary policy, the paper estimates the impulse response functions and variance decompositions of variables. The empirical results show that the changes in money supply have a significant impact on output rather than price in the short run. The impacts of money supply on price and output are stronger through the exchange rate and credit channels, but however, are weaker through the interest rate channel. The impacts of monetary policy on output and inflation may be erroneous through the equity price channel because of the lack of an established and well-functioning stock market.

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Endogeneity of Monetary Policy Reaction Fun~tion: An Experience from Pakistan's Economy

The Pakistan Development Review ◽

10.30541/v30i4iipp.931-941 ◽

1991 ◽

Vol 30 (4II) ◽

pp. 931-941

Author(s):

M. Aynul Hasan ◽

Qazi Masood Ahmed

Keyword(s):

Monetary Policy ◽

Central Bank ◽

Money Supply ◽

Relative Effectiveness ◽

Reaction Function ◽

Standard Result ◽

Policy Variable ◽

Target Values ◽

Monetary Policy Reaction Function ◽

Policy Reaction Function

Monetary policy, in general, refers to those steps taken by the Central Bank to achieve such broader objectives of the economy as growth, employment, external balance and price stability through changes in the money supply, interest rates and credit policies. The money supply thus created by the Central Bank should be in response to the changes in key macroeconomic target variables such as GNP, balance of payments, inflation, internal debt and unemployment. Indeed, a properly estimated monetary policy reaction function can provide useful information regarding such matters as to whether the Central Bank, in fact, has been systematically accommodating to the changes in the target variables. The reaction function can also provide insight into the question as to what should be the relevant indicators of the monetary policy. In addition, as argued by Havrilesky (1967), it may also play a crucial role in the formulation of long-term monetary policy strategy. The other important consideration in the development of a monetary policy reaction function pertains to the endogeneity of the monetary policy. As pointed out by Goldfeld and Blinder (1972), if a policy variable responds to the lagged (or expected) target values, then considering such a policy variable as exogenous would not only introduce the problem of misspecification but will also produce serious biases in the parameters estimated from those models. In particular, if the monetary policy variable happens to be strongly influenced by target variables, then the standard result of the relative effectiveness of the monetary policy vis-a-vis fiscal policy can be questionable on the grounds of reverse causation problem.

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MONETARY POLICY AND TELECOMMUNICATION OUTPUT IN NIGERIA

J-MACC : Journal of Management and Accounting ◽

10.52166/j-macc.v3i2.2070 ◽

2020 ◽

Vol 3 (2) ◽

pp. 62-73

Author(s):

John Abiodun Akinde ◽

Elijah Oludayo

Keyword(s):

Monetary Policy ◽

Money Supply ◽

Negative Relationship ◽

Negative Influence ◽

Favourable Effect ◽

Data Series ◽

Long Run ◽

Integration Test ◽

Short Run ◽

Positive Effect

Different policies impact on the growth of the telecommunication sector in Nigeria. One of these policies which influence the expansion or contraction of the telecommunication output is monetary policy. To this end, this research examined the effect of monetary policy on telecommunication output in Nigeria. For the purpose of analysis, time series secondary data were sourced from Central Bank of Nigeria (CBN) statistical bulletin covering the periods1986 to 2018. Autoregressive Distributed Lag (ARDL) technique was employed after examining the stationarity of the data series using Augmented Dickey-Fuller technique. The bound co-integration test revealed that there is long run equilibrium between the monetary policy variables employed and telecommunication output. The ARDL result revealed that money supply had significant and positive effect on telecommunication output in the short and long run; liquidity ratio produced an insignificant and negative relationship with telecommunication output in the short run and insignificant positive effect in the long run; exchange rate had insignificant negative effect in the short run and a significant positive effect on telecommunication output in the long run; consumer price index had significant negative influence on telecommunication outputboth in the short run and long run. The study concluded that monetary policy stimulates telecommunication output in Nigeria. Thus, it was recommended that the monetary authority should pursue an expansionary monetary policy to sustain the positive influence of money supply on telecommunication output in Nigeria while rolling out policy to reduce the liquidity ratio of banks in the short run but increase it in the long run so that the long term favourable effect of liquidity ratio can be felt on telecommunication output.

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Effect of Money Supply on the Stock Market

Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis ◽

10.11118/actaun201765020465 ◽

2017 ◽

Vol 65 (2) ◽

pp. 465-472 ◽

Cited By ~ 3

Author(s):

Vladimír Pícha

Keyword(s):

Monetary Policy ◽

Stock Market ◽

Money Supply ◽

Policy Framework ◽

Vector Error Correction ◽

Flow Of Funds ◽

Portfolio Balance ◽

Vector Error ◽

Long Run ◽

The Impact

This paper observes effect of money supply on the stock market through the portfolio balance channel as a transmission mechanism of monetary policy. National flow of funds accounts, specifically assets from US households’ portfolios, represent a key data source. Johansen’s cointegration methodology is employed in the empirical part of the paper to analyze both short term and long term relationships among researched variables. Estimates of vector error correction model help to reliably quantify intensity of the effect. Results show money supply excercises influence on valuation of S&P 500 index with 6 months lag. The impact is also distinguishable in the long run, whereas all observed asset classes can positively influence price of S&P 500. Findings are then contextualized in the concluding part of the paper using a monetary policy framework.

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Impacts of Monetary Policy on Inflation in Bangladesh

Global Disclosure of Economics and Business ◽

10.18034/gdeb.v1i2.198 ◽

2012 ◽

Vol 1 (2) ◽

pp. 103-119

Author(s):

Mohammad Nayeem Abdullah ◽

Kamruddin Parvez ◽

Rahat Bari Tooheen

Keyword(s):

Monetary Policy ◽

Money Supply ◽

Consumer Price Index ◽

Developed Countries ◽

Open Market ◽

Major Transitions ◽

Classification Code ◽

Inflation Rates ◽

The Developed Countries ◽

The Impact

The objective of this paper is to analyze and discuss the impacts of monetary policy on Bangladesh inflation, identify the major drawbacks of the policies in minimizing the inflation rate and suggest policy recommendations on some key issues of Bangladesh inflation. To estimate the effects of the monetary policy in Bangladesh, at first the impact of different monetary policy tools used by the “Central Banks” of the developed countries have been reviewed. Next, the impact of the monetary policy of Bangladesh Bank and government have been analyzed for which the data on money supply, growth of the GDP, changes in the price level, and changes in the unemployment rate have been quantitatively analyzed. We mainly used Consumer Price Index to determine the level on inflation in Bangladesh. Moreover, our study focuses on data collected from the 1950-2012, mainly focusing our study from the period of 2000-2012 as major transitions have been observed in the economy during the 12 years. We have further analyzed whether there is any correlation between (i) inflation rates and money supply, and (ii) inflation rates and growth of GDP. On the basis of the outcome of the qualitative and quantitative analysis, in the end findings and conclusion have been drawn. We have found the correlation, the impacts of monetary policy and inflation, their drawbacks and possible solutions such as independence of the monetary policy from the fiscal policy and enhancing the transparency, communication and signaling effect of policy moves, keeping the broad money in line with the estimated real GDP growth, borrowing from non-bank sources, and control money supply through various open market operations. Due to lack of access to sufficient data, some of our work is based on hypothesis and models. So some data vary according to the model being used. Lastly, even though, many works have been done from the perspective of developed and other developing countries, much work has not been carried out to establish the relationship between monetary policy and inflation in Bangladesh. GEL Classification Code: E31; E42; E50

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An econometric analysis of the effectiveness of fiscal and monetary policies in India

10.31219/osf.io/39s7a ◽

2021 ◽

Author(s):

Anand Nadar

Keyword(s):

Economic Growth ◽

Monetary Policy ◽

Fiscal Policy ◽

Money Supply ◽

Series Data ◽

Monetary Policies ◽

Indian Economy ◽

Long Run ◽

Short Run ◽

Bound Test

This study investigatesthe effectiveness of fiscal policy and monetary policy in India. We collected thetime series data for India ranging from 1960 to 2019 from World Development Indicator (WDI). Weapplied the bound test co-integration approach to check the long-run relationship between fiscalpolicy, monetary policy, and economic growth in the context of Indian economy. The short-run andlong-run effects of fiscal policy and monetary policy have been estimated using ARDL models. Theresults showed that there is a long-run relationship between fiscal and monetary policies witheconomic growth. The estimated short-run coefficients indicated that a few immediate short runimpacts of fiscal and monetary policies are insignificant. However, the short-run impacts becomesignificant as time passes. The long-run results suggested that the long-run impact of both fiscal andmonetary policies on economic growth are positive and significant. More specifically, the GDP levelincreases if the money supply and government expenditure increase (Expansionary fiscal andmonetary policies). On the other hand, the GDP level decreasesif the money supply and governmentexpenditure decrease (contractionary fiscal and monetary policies). Therefore, this studyrecommends to use expansionary policies to spur the Indian economy.

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Monetary Policy Channels and Industrial Production in Pakistan: Evidences based on ARDL Approach

Journal of Accounting and Finance in Emerging Economies ◽

10.26710/jafee.v6i3.1351 ◽

2020 ◽

Vol 6 (3) ◽

pp. 713-721

Author(s):

Muhammad Tariq Mahmood ◽

Sadaf Shahab ◽

Saad Ali Rabbani

Keyword(s):

Monetary Policy ◽

Money Supply ◽

Industrial Production ◽

Industrial Sector ◽

The Other ◽

Economic Management ◽

Long Run ◽

Consumer Prices ◽

Short Run ◽

Bound Test

Monetary policy is a significant component of economic management, with which we can control higher inflation, boost the economic growth and stabilize the other macroeconomic activities. This study investigates the channels of monetary policy affecting the industrial production using monthly data of Pakistan. In this regard, we have applied Bound test for co-integration to investigate the dynamic behaviour of the variables. Our results indicate that the consumer prices, money supply and money market rates are negatively effective for industrial production in the short-run. On the other hand, exchange rate has positive effect in short-run. The results also indicate that there is statistically significant and positive relationship between industrial output and money supply in the long-run, too. The adjustment mechanism suggests stability in the system and is statistically significant. Our results imply that the authorities should use expansionary monetary stance through money supply channel to boost the industrial sector.

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Monetary Policy and Liquidity of Vietnam’s Stock Market

Journal of Asian Business and Economic Studies ◽

10.24311/jabes/2016.23.2.04 ◽

2016 ◽

Vol 23 (02) ◽

pp. 02-21

Author(s):

Ly Tran Thi Hai

Keyword(s):

Time Series ◽

Monetary Policy ◽

Stock Market ◽

Money Supply ◽

Industrial Production ◽

Market Liquidity ◽

Var Model ◽

Market Returns ◽

Liquidity Measures ◽

The Impact

This study investigates the impact of monetary policy on liquidity of Vietnam’s stock market from September 2007 to November 2014. Time series of liquidity are determined by monthly liquidity data for 643 enterprises in the surveyed period. Two variables of the monetary policy, including growth in money supply and interbank rate, are employed in VAR model along with four different measures of market liquidity. The results show that unexpected variance in the two monetary policy variables has no significant impact on the market liquidity, which, in turn, may be improved by the positive shocks of market returns, inflation, and growth in industrial production. Market variance does produce certain effects, but discrepancies occur in the signs of various liquidity measures.

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The political economy of inflation

European Journal of Economics and Economic Policies Intervention ◽

10.4337/ejeep.2021.03.07 ◽

2021 ◽

Vol 18 (3) ◽

pp. 331-343

Author(s):

Frances Coppola

Keyword(s):

Monetary Policy ◽

Fiscal Policy ◽

Money Supply ◽

Central Banks ◽

The Political ◽

Economic Output ◽

Political Choices ◽

Redistributive Effects ◽

Fiscal And Monetary Policy ◽

Political Decisions

For the last 40 years, macroeconomics has been dominated by Milton Friedman’s view that inflation occurs when the supply of money rises more quickly than economic output – ‘too much money chasing too few goods’, as the saying goes. If inflation is always due to an imbalance of money supply and output, central banks alone determine the path of inflation, and fiscal policy merely has a redistributive function. This paper draws on historical and empirical evidence as well as recent theoretical literature to show that this view is mistaken. Monetary policy has redistributive effects, and fiscal policy affects the money supply. It is therefore impossible to separate them in practice. Both fiscal and monetary policy have inflationary consequences, and because their distributional effects are different, monetary policy cannot fully offset fiscal decisions. Fiscal and monetary policy are influenced by political decisions and are themselves political in nature. Since inflation reflects spending and saving patterns which are affected by political choices, it is fundamentally a political phenomenon.

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