scholarly journals The Response of Interest Rates to Unexpected Weekly Money: Are Policy Changes Important?

1990 ◽  
Vol 56 (3) ◽  
pp. 577 ◽  
Author(s):  
R. W. Hafer ◽  
Richard G. Sheehan
Keyword(s):  
Interest Rates ◽  
Policy Changes

The Political Manipulation of Macroeconomic Policy

1990 ◽  
Vol 84 (3) ◽  
pp. 767-795 ◽  
Author(s):  
John T. Williams
Keyword(s):  
Interest Rates ◽  
The United States ◽  
Real Income ◽  
Policy Cycle ◽  
Presidential Approval ◽  
Policy Changes ◽  
Macroeconomic Policies ◽  
Monetary Policies ◽  
Economic Forces ◽  
Party Differences

Conventional wisdom and some research indicate that macroeconomic policies follow cycles corresponding to political, as well as economic, forces. Using vector autoregression analysis, I test three models of monetary policy determination for the United States, 1953–1984: the electoral cycle model (that reelection motivations on the part of presidents create a policy cycle), the party differences model (that policy changes reflect revolving presidential party administrations), and the referendum model (that changes in presidential approval create, in effect, a continuing referendum, allowing presidents to monitor their success and change macroeconomic policies when necessary). Analysis shows that monetary policies, as measured by the monetary base and short-term interest rates, respond to the election cycle and presidential approval (although the effect on macroeconomic outcomes is ambiguous). Party differences are found in real income but are not very significant in other variables.

Monetary policy, bank leverage and liquidity

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Van Dan Dang ◽  
Khac Quoc Bao Nguyen
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Monetary Shocks ◽  
Policy Changes ◽  
Financial Leverage ◽  
Content Type ◽  
Funding Sources ◽  
Dynamic Panels ◽  
Asset Portfolio ◽  
Policy Bank

PurposeThe study explores how banks design their financial structure and asset portfolio in response to monetary policy changes.Design/methodology/approachThe authors conduct the research design for the Vietnamese banking market during 2007–2018. To ensure robust findings, the authors employ two econometric models of static and dynamic panels, multiple monetary policy indicators and alternative measures of bank leverage and liquidity.FindingsBanks respond to monetary expansion by raising their financial leverage on the liability side and cutting their liquidity positions on the asset side. Further analysis suggests that larger banks' financial leverage is more responsive to monetary policy changes, while smaller banks strengthen the potency of monetary policy transmission toward bank liquidity. Additionally, the authors document that lower interest rates induce a beneficial effect on the net stable funding ratio (NSFR) under Basel III guidelines, implying that banks appear to modify the composition of liabilities to improve the stability of funding sources.Originality/valueThe study is the first attempt to simultaneously examine the impacts of monetary policy on both sides of bank balance sheets, across various banks of different sizes under a multiple-tool monetary regime. Besides, understanding how banks organize their stable funding sources and illiquid assets amid monetary shocks is an innovation of this study.

scholarly journals The Australian housing supply myth

2019 ◽  
Author(s):  
Cameron Murray
Keyword(s):  
Interest Rates ◽  
Opportunity Cost ◽  
Town Planning ◽  
State Governments ◽  
Housing Supply ◽  
Policy Changes ◽  
Economic Activities ◽  
Political Pressure ◽  
Balance Sheets ◽  
Price Effects

Australia’s expensive housing market is claimed to be primarily the result of a shortage of supply due to town planning constraints, leading to political pressure on councils and state governments to remove planning regulations, regardless of their planning merit. We argue that this supply story is a myth and provide evidence against three key elements of the myth. First, there has been a surplus of dwellings constructed compared to population demand, rather than a shortage. Second, planning approvals typically far exceed dwelling construction, implying that more approvals or changes to planning controls on the density and location of development cannot accelerate the rate of new housing supply. Third, large increases in the rate of housing supply would have small price effects relative to other factors, like interest rates, and come with the opportunity cost of forgone alternative economic activities. Indeed, if the story were true, then property developers would be foolishly lobbying for policy changes that reduce the price of their product and the value of the balance sheets, which mostly comprise undeveloped land.

The Hidden Logic of “Irrational” Economic Policies in Ecuador

1990 ◽  
Vol 32 (2) ◽  
pp. 43-68 ◽  
Author(s):  
Francisco E. Thoumi
Keyword(s):  
Interest Rates ◽  
Latin American ◽  
Economic Performance ◽  
Policy Recommendations ◽  
Economic Policies ◽  
Policy Changes ◽  
The Past ◽  
The Poor ◽  
State Enterprises ◽  
Latin American And Caribbean

Mainstream economists blame the poor 1980s economic performance of most Latin American and Caribbean (LAC) countries on the poor economic policies followed by the region for the past several decades and recommend drastic policy changes including (a) elimination of many subsidies, (b) lowering tariffs and other obstacles to international trade, (c) privatization of many state enterprises, (d) liberalization of capital markets and interest rates, and so on — a policy package designed to lower greatly the government's intervention in the economy. This policy advice has been inspired, at least in part, by the generally accepted failure of the LAC governments to promote stable and fair growth through intervention.However, in spite of pressures by multilateral and bilateral agencies, most governments find it very difficult to implement these policies, even when policymakers and their advisers fully understand the logic behind the policy recommendations and agree with them.

The UK economy

1998 ◽  
Vol 165 ◽  
pp. 7-24
Author(s):  
Garry Young
Keyword(s):  
Interest Rates ◽  
Public Spending ◽  
Fast Growth ◽  
Policy Changes ◽  
Bank Of England ◽  
The Government ◽  
The Uk

Two of the most significant policy changes made by the government since coming to office are the transfer to the Bank of England of the power to set interest rates and the announcement of large increases in public spending following its Comprehensive Spending Review (CSR). The unexpectedly fast growth in future public spending is bound to have an immediate and important bearing on the setting of interest rates. As such, the development of the economy over the coming years will be affected by the interaction of these two separate policy changes.

Market Anticipation of Fed Policy Changes and the Term Structure of Interest Rates*

2009 ◽  
Vol 14 (2) ◽  
pp. 313-342 ◽  
Author(s):  
Massoud Heidari ◽  
Liuren Wu
Keyword(s):  
Interest Rates ◽  
Term Structure ◽  
Policy Changes

scholarly journals When homes earn more than jobs: the rentierization of the Australian housing market

2020 ◽  
Author(s):  
Cameron Murray ◽  
Josh Ryan-Collins
Keyword(s):  
Interest Rates ◽  
Housing Market ◽  
House Prices ◽  
Financial Policy ◽  
Economic Rent ◽  
Policy Changes ◽  
Policy Alternatives ◽  
Financial Liberalisation ◽  
The 1960S ◽  
Over Time

This article develops the concept of housing market ‘rentierization’ to describe the shift in the treatment of housing away from its use as a consumption good to an asset from which economic rent can be extracted, with Australia as a canonical example. Rentierization encompasses, but goes beyond, the financialisation of housing that has been the focus of attention in recent political economy literature as it involves policy changes and coordination across the land and housing market, fiscal-policy as well as financial policy spheres. In addition, we argue, rentierization offers a better explanation of rising house prices than the decline in real interest rates which has come to the fore in the recent economics literature. Our study of Australia examines the returns to land and housing over time and traces the roots of rentierization to developments that preceded the financial liberalisation of the 1980s, including the privatisation of public housing in the 1960s and 70s. We consider some of the reasons for the resilience of Australia’s rentier-oriented housing model, and policy alternatives which might help reduce the logic of rentierization and, in doing so, reduce housing-related inequalities.

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