scholarly journals The impact of inflation targeting on macroeconomic indicators in Ukraine

2020 ◽  
Vol 15 (2) ◽  
pp. 94-104
Author(s):  
Mykhailo Kuzheliev ◽  
Dmytro Zherlitsyn ◽  
Ihor Rekunenko ◽  
Alina Nechyporenko ◽  
Guram Nemsadze
Keyword(s):  
Monetary Policy ◽  
Emerging Economies ◽  
Inflation Targeting ◽  
Consumer Price Index ◽  
Policy Instruments ◽  
Simultaneous Equation ◽  
Equation Model ◽  
Policy Implications ◽  
Economic Indicators ◽  
The Impact

The correlation between macroeconomic dynamics and the inflation rate is the subject of many economic studies. The principles of monetary policy are developed in classical economics studies, which are based on the theories of Keynes, Phillips, Campbell, etc. However, classic approaches require practical validation, especially with regard to modern economic trends in times of crisis and emerging economies. Therefore, the purpose of the paper is to investigate and summarize the impact of inflation targeting and other key monetary policy instruments on fundamental economic indicators in Ukraine during periods of stability and crises. An empirical analysis is based on official statistics from Ukraine for 2011–2019. This study uses econometric methods (multivariate regression and simultaneous equation model), which are applied for the general and transmission impact of inflation on the estimation of economic growth. The results prove that inflation does not affect (less than 0.46 linear correlation) fundamental economic indicators during periods of real GDP growth and a quarterly CPI level of less than 2%. On the other hand, there are significant simultaneous regressions (more than 0.8 coefficients of determination) between unemployed, spending on real final consumption, hryvnia exchange rate and monetary policy instruments (discount rate, international reserves, amount of government bonds, M3 monetary aggregate) for periods when the quarterly CPI (consumer price index) is more than 2%. Therefore, the traditional monetary policy implications are discussed for emerging economies.

scholarly journals FEATURES OF INTEREST-BEARING MONETARY POLICY INSTRUMENTS OF THE CZECH NATIONAL BANK

2020 ◽  
pp. 127-133
Author(s):  
A. V. Berdyshev ◽  
N. S. Bobyr
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Global Financial Crisis ◽  
Policy Instruments ◽  
Macroeconomic Policies ◽  
Exact Test ◽  
Macroeconomic Indicators ◽  
National Bank ◽  
The Impact

The features of the economic development of the Czech Republic after the global financial crisis, the role of the Czech National Bank in the formation of macroeconomic policies, as well as the peculiarities of monetary regulation in the study period have been defined in the article. The main goal of the paper is to assess the impact of interest rates used by the Czech National Bank in the process of monetary regulation on the dynamics of the main macroeconomic indicators, which is considered as one of the necessary conditions for the effectiveness of the inflation targeting regime. By the results of the correlation analysis and Fisher’s exact test, it has been determined that the Czech National Bank could affect the main macroeconomic indicators based on the percentage of monetary policy instruments used.

Rising food inflation and India's monetary policy

2011 ◽  
Vol 4 (1) ◽  
pp. 73-94 ◽  
Author(s):  
Vivek Moorthy ◽  
Shrikant Kolhar
Keyword(s):  
Monetary Policy ◽  
Emerging Economies ◽  
Consumer Price Index ◽  
Food Prices ◽  
Content Type ◽  
Welfare Impact ◽  
Technical Issues ◽  
Price Hike ◽  
The Impact ◽  
Food Inflation

PurposeThe purpose of this paper is to analyse the implications of sharply rising food prices for monetary policy in India and similar emerging economies at present.Design/methodology/approachThis paper uses analytical arguments from relevant macroeconomic literature and evidence from late 1960s US data to examine whether the 1970s stagflation was due to the OPEC price hike. It develops a two person (rich and poor), two commodity (food and non‐food) model to examine the impact of rising food prices on GDP, on measures of inflation, and on welfare, in the model.FindingsPreviously neglected evidence indicates that stagflation (simultaneously rising unemployment and inflation) preceded the OPEC price hike. The model results indicate that when food prices rise, the GDP deflator falls relative to the consumer price index (CPI).Research limitations/implicationsThe impact of supply shocks should be investigated by carefully examining links between abnormal rainfall and weather and output and prices on commodity by commodity basis. Further, technical issues pertaining to construction of a composite CPI representative of the population need to be explored.Practical implicationsMonetary policy in India (and similar emerging economies) should focus upon a population weighted CPI or some variant thereof.Social implicationsHigh GDP growth should not lead to complacency, since when food prices are rising, the overall welfare impact may be negative.Originality/valueThe model presented in this paper explains the sustained divergence in India, in recent years, between the CPI versus the GDP deflator measures of inflation. It also highlights a possible similar divergence between GDP and overall welfare.

scholarly journals A Simultaneous-Equation Model of Estimating the Response of the Consumer Price to Exchange Rate Movements in Thailand

2020 ◽  
Vol 10 (1) ◽  
pp. 284
Author(s):  
Yu Hsing
Keyword(s):  
Exchange Rate ◽  
Crude Oil ◽  
Inflation Targeting ◽  
Price Level ◽  
Simultaneous Equation ◽  
Equation Model ◽  
Oil Price ◽  
Simultaneous Equation Model ◽  
Crude Oil Price ◽  
The Impact

This paper examines exchange rate pass-through (ERPT) to the consumer price in Thailand based on a simultaneous-equation model consisting of the IS, LM and AS function. It employs comparative static analysis to determine the impact of a change in an exogenous variable on the equilibrium price level. The paper finds that a 1% depreciation of the Thai baht tends to cause the CPI to rise by 0.0696% and has declined since the adoption of inflation targeting in 2000. In addition, more money supply, more government deficit as a percent of GDP, a higher crude oil price, a higher U.S. CPI, and a higher expected price tends to raise Thailand’s CPI. The findings suggest that in addition to the exchange rate, other relevant variables such as fiscal policy, monetary policy, the crude oil price, U.S. price level and the expected price level are expected to impact the consumer price level.

scholarly journals The Impact of Financial Dollarization on Inflation Targeting: Empirical Evidence from Serbia

2017 ◽  
Vol 6 (2) ◽  
pp. 23-43 ◽  
Author(s):  
Nikola Fabris ◽  
Nina Vujanović
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Inflation Targeting ◽  
Policy Instruments ◽  
Nominal Exchange Rate ◽  
Early Application ◽  
Pass Through ◽  
Financial Dollarization ◽  
Exchange Rate Pass Through ◽  
The Impact

Abstract Serbia has applied inflation targeting against the backdrop of financial dollarization for almost a decade. In such circumstances, efficiency of monetary policy instruments decreases and begs the question of efficiency of the monetary regime efficiency issue. Although there is some empirical testing of financial dollarization effects on monetary policy performance in the inflation targeting regime for some countries, such studies for Serbia mostly cover periods of early application of the regime. Therefore, the authors analysed financial dollarization effects on prices, i.e. exchange rate pass-through effect using Serbia as an example. The study concludes that although unpredictable changes in financial dollarization strongly affect nominal exchange rate, prices level is subject to moderate but persistent increase upon this shock.

scholarly journals Inflationary Processes in Russia Amid the COVID-19 Pandemic

2021 ◽  
pp. 52-60
Author(s):  
Dz. I. Ramazanov ◽  
E. Yu. Onopyuk
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Public Debt ◽  
World Economy ◽  
Consumer Price Index ◽  
Policy Instruments ◽  
Graphical Analysis ◽  
The World ◽  
Food Market ◽  
The Impact

The article examines inflationary processes in Russia and the impact of the coronavirus recession on them. The need for this study is due to the fact that the existing factors of inflation in modern conditions "overgrown" with new causes due to changes in the world economy. Using the methods of positive and normative analysis, tabular and graphical analysis, factors that have a particular impact on inflation are considered, taking into account the events taking place in the world economy. As a result, the study showed that the exchange rate, the situation on the food market and budget financing are the factors that had the most significant impact on inflation in Russia. The conclusion is made about the significant role of the dynamics of the ruble exchange rate in the deployment of inflation, the contribution of agflation and price disparity to the consumer price index. The directions of struggle against price disparity and their use in anti-inflationary strategy are considered. The duality of the nature of public debt and inflation is revealed, a conclusion is made about the possibility of increasing public debt, and possible inflationary scenarios for the economy are given. Based on the results of the study, it is proposed to use an anti-inflationary strategy that would fully take into account inflation factors and adequate anti-inflationary policy instruments. The growth of public debt, according to the authors, will have a delayed inflationary effect; tightening of monetary policy is in conflict with the achievement of sustainable rates of economic growth. Anti-inflationary policy should be aimed at leveling external shocks while maintaining the guidelines for a stimulating monetary policy.

scholarly journals The impact of inflation targeting framework on food price inflation: evidence from developing economies

2017 ◽  
Vol 6 (4) ◽  
pp. 53-60 ◽  
Author(s):  
Abhijit Surya
Keyword(s):  
Monetary Policy ◽  
Inflation Targeting ◽  
Developing Economies ◽  
Policy Instruments ◽  
Food Prices ◽  
Policy Framework ◽  
Price Inflation ◽  
Inflation Rates ◽  
The Impact ◽  
Monetary Policy Framework

Inflation Targeting (IT) has gained much popularity in recent years, with fifteen countries formally adopting it as a monetary policy framework since 2000. However, in developing countries, where the contribution of food prices to headline inflation is generally higher than in advanced economies, the adequacy of an IT framework for curbing inflation is very much contested. In this paper, we use a difference-in-differences approach to evaluate the treatment effect of adopting IT. Controlling for reversion to the mean, we find that economies that function under an IT regime do no better than countries that use alternative policy instruments. We verify the robustness of these results using panel unit-root tests and find that food inflation rates converge across economies irrespective of the monetary policy framework implemented.

Monetary policy and the effect of the transfer of oil prices to inflation

2020 ◽  
pp. 41-50
Author(s):  
Ph. S. Kartaev ◽  
I. D. Medvedev
Keyword(s):  
Monetary Policy ◽  
Inflation Targeting ◽  
Dynamic Models ◽  
Oil Prices ◽  
Oil Price ◽  
Oil Price Shocks ◽  
Negative Effects ◽  
Price Shocks ◽  
Policy Regime ◽  
The Impact

The paper examines the impact of oil price shocks on inflation, as well as the impact of the choice of the monetary policy regime on the strength of this influence. We used dynamic models on panel data for the countries of the world for the period from 2000 to 2017. It is shown that mainly the impact of changes in oil prices on inflation is carried out through the channel of exchange rate. The paper demonstrates the influence of the transition to inflation targeting on the nature of the relationship between oil price shocks and inflation. This effect is asymmetrical: during periods of rising oil prices, inflation targeting reduces the effect of the transfer of oil prices, limiting negative effects of shock. During periods of decline in oil prices, this monetary policy regime, in contrast, contributes to a stronger transfer, helping to reduce inflation.

The influence of inflation targeting on the pass-through effect of the exchange rate

2018 ◽  
pp. 70-84
Author(s):  
Ph. S. Kartaev ◽  
Yu. I. Yakimova
Keyword(s):  
Developing Countries ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Inflation Targeting ◽  
Policy Regime ◽  
Short And Long Term ◽  
The Exchange Rate ◽  
Pass Through ◽  
The Impact

The paper studies the impact of the transition to the inflation targeting regime on the magnitude of the pass-through effect of the exchange rate to prices. We analyze cross-country panel data on developed and developing countries. It is shown that the transition to this regime of monetary policy contributes to a significant reduction in both the short- and long-term pass-through effects. This decline is stronger in developing countries. We identify the main channels that ensure the influence of the monetary policy regime on the pass-through effect, and examine their performance. In addition, we analyze the data of time series for Russia. It was concluded that even there the transition to inflation targeting led to a decrease in the dependence of the level of inflation on fluctuations in the ruble exchange rate.

Remittances, Economic Growth and Poverty: A Case of African OIC Member Countries

2018 ◽  
Vol 57 (2) ◽  
pp. 121-143
Author(s):  
Nasim Shah Shirazi ◽  
Sajid Amin Javed ◽  
Dawood Ashraf
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Poverty Reduction ◽  
Simultaneous Equation ◽  
Equation Model ◽  
Annual Data ◽  
Simultaneous Equation Model ◽  
African Countries ◽  
Alternative Source ◽  
The Impact

This paper investigates the impact of remittance inflows on economic growth and poverty reduction for seven African countries using annual data from 1992-2010. By using the depth of hunger as a proxy for poverty in a Simultaneous Equation Model (SEM), we find that remittances have statistically significant growth enhancing and poverty reducing impact. Drawing on our estimates, we conclude that financial development level significantly increases the remittances inflows and strengthens poverty alleviating impact of remittances. Results of our study further show a signficant interactive imapct of remittances and finacial develpment on economic growth, suggesting the substitutability between remittance inflows and financial development. We further find that 3 percentage point increase in credit provision to the private sector (financial development) can help eliminate the severe depth of hunger in the region. Remittances, serving an alternative source of private credit, can be effective in this regard. Keywords: Remittance Inflow, Poverty Alleviation, Financial Development, Simultaneous Equation Model

scholarly journals The Effects of Reverse Knowledge Spillover on China’s Sustainable Development: Sustainable Development Indicators Based on Institutional Quality

2021 ◽  
Vol 13 (4) ◽  
pp. 1628
Author(s):  
Xiaoxu Dong ◽  
Cheon Yu ◽  
Yun Seop Hwang
Keyword(s):  
Sustainable Development ◽  
Emerging Economies ◽  
Institutional Quality ◽  
Knowledge Spillover ◽  
Simultaneous Equation ◽  
Equation Model ◽  
Environmental Aspects ◽  
Development Indicators ◽  
Developed Economies ◽  
The One

This study investigates how reverse knowledge spillover (RKS) generated through outward foreign direct investment (OFDI) promotes sustainable development in an investment home country. Economic, social, and environmental dimensions are the pillars of sustainable development and their indicators are developed upon the concept of institutional quality. To this end, we use a balanced panel of 30 Chinese Mainland provinces from 2003 to 2016 and employ a simultaneous equation model to analyze the data in order to observe the direct and indirect effects of OFDI-induced RKS on sustainable development. The current study adopts several indicators to capture the economic, social, and environmental aspects of sustainable development. Additionally, we classify RKS into two types, given the investment destinations in terms of developed economies and emerging economies. On the one hand, our findings confirm that OFDI-induced RKS from developed economies facilitates domestic innovation but negatively affects progress on social and environmental development. On the other hand, OFDI-induced RKS from emerging economies is not conducive to domestic innovation, but it directly fosters sustainable development.

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