scholarly journals Money Demand and Inflation: The relationship between money demand, inflation, and the risk premium

2021 ◽  
Author(s):  
S M Nazmuz Sakib
Keyword(s):  
Interest Rates ◽  
Linear Combination ◽  
Money Demand ◽  
Risk Premium ◽  
Financial Policies ◽  
Financial Gain ◽  
Saving Mode ◽  
The Relationship

In varied economics laws, inflation and interest rates are a standard reference of the economy. to place it merely, once interest rates fall, a lot of people and establishments will borrow extra money from banks and alternative lenders. Rising and rising interest rates push customers into saving mode as a result of the next come on savings. This leaves customers with less financial gain to pay that slows the economy and, as a result, lowers inflation. This relationship shapes up to date financial policies associated is that the most powerful consider the direction of an economy. this suggests that variable interest rates and inflation have a linear combination which will be shapely as economic potency.

scholarly journals Money and inflation in Switzerland

2022 ◽  
Vol 158 (1) ◽  
Author(s):  
Peter Kugler ◽  
Samuel Reynard
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Money Demand ◽  
Economic Activity ◽  
Monetary Aggregates ◽  
The Past ◽  
Exchange Rate Fluctuations ◽  
Policy Transmission ◽  
Secular Decline ◽  
The Relationship

AbstractThis paper characterizes the relationship between monetary aggregates, inflation and economic activity in Switzerland since the mid-1970s. Traditional forms of money demand and quantity theory relationships have remained stable over the whole period. Broad money excesses over trend values, accounting for a secular decline in interest rates and thus in trend velocity, have been followed by persistently higher inflation and output with the usual monetary policy transmission lags. Money and exchange rate fluctuations can explain the major inflation developments in Switzerland over the past four decades.

The Problem of Identifying and Modeling the Relationship between Monetary Factor and Inflation in the Russian Economy

2008 ◽  
pp. 61-76
Author(s):  
A. Porshakov ◽  
A. Ponomarenko
Keyword(s):  
Money Supply ◽  
Money Demand ◽  
Russian Economy ◽  
Long Run ◽  
Complex Approach ◽  
Wide Range ◽  
Long Time ◽  
The Relationship ◽  
Supply Side Factors

The role of monetary factor in generating inflationary processes in Russia has stimulated various debates in social and scientific circles for a relatively long time. The authors show that identification of the specificity of relationship between money and inflation requires a complex approach based on statistical modeling and involving a wide range of indicators relevant for the price changes in the economy. As a result a model of inflation for Russia implying the decomposition of inflation dynamics into demand-side and supply-side factors is suggested. The main conclusion drawn is that during the recent years the volume of inflationary pressures in the Russian economy has been determined by the deviation of money supply from money demand, rather than by money supply alone. At the same time, monetary factor has a long-run spread over time impact on inflation.

J. Tobin's Monetary Dynamic Model and the Analysis of Russian Economy

2009 ◽  
pp. 70-93
Author(s):  
V. Manevich
Keyword(s):  
Dynamic Model ◽  
Economic Thought ◽  
Financial Policies ◽  
Russian Economy ◽  
Q Theory ◽  
Keynesian Economic ◽  
The Relationship ◽  
Monetary Assets

The paper considers the monetary dynamic model developed by J. Tobin, the leader of Keynesian economic thought in 1970-1990. Particularly, the author examines q-theory of investment proposed by Tobin which allows to expose the relationship between supply of monetary assets and investment in real capital. Application of various tools of monetary and financial policies is also considered in its different forms. The author aspires to use Tobin's model for the analysis of processes existing in the Russian economy and to test theoretical propositions and relationships elaborated by Tobin on Russian statistics.

The Demand For Money in Pakistan: Reply (Notes and Comments)

1975 ◽  
Vol 14 (3) ◽  
pp. 370-375
Author(s):  
M. A. Akhtar
Keyword(s):  
Interest Rates ◽  
Money Demand ◽  
Strong Support ◽  
Physical Capital ◽  
Careful Examination ◽  
Demand For Money ◽  
Weak Support ◽  
Complementarity Hypothesis ◽  
The Difference ◽  
The One

I am grateful to Abe, Fry, Min, Vongvipanond, and Yu (hereafter re¬ferred to as AFMVY) [1] for obliging me to reconsider my article [2] on the demand for money in Pakistan. Upon careful examination, I find that the AFMVY results are, in parts, misleading and that, on the whole, they add very little to those provided in my study. Nevertheless, the present exercise as well as the one by AFMVY is useful in that it furnishes us with an opportunity to view some of the fundamental problems involved in an empi¬rical analysis of the demand for money function in Pakistan. Based on their elaborate critique, AFMVY reformulate the two hypo¬theses—the substitution hypothesis and the complementarity hypothesis— underlying my study and provide us with some alternative estimates of the demand for money in Pakistan. Briefly their results, like those in my study, indicate that income and interest rates are important in deter¬mining the demand for money. However, unlike my results, they also suggest that the price variable is a highly significant determinant of the money demand function. Furthermore, while I found only a weak support for the complementarity between money demand and physical capital, the results obtained by AFMVY appear to yield a strong support for that rela¬tionship.1 The difference in results is only a natural consequence of alter¬native specifications of the theory and, therefore, I propose to devote most of this reply to the criticisms raised by AFMVY and the resulting reformulation of the two mypotheses.

scholarly journals Was the Gibson Paradox for real? A Wicksellian study of the relationship between interest rates and prices

2014 ◽  
Vol 21 (2) ◽  
pp. 139-163 ◽  
Author(s):  
Jagjit S. Chadha ◽  
Morris Perlman
Keyword(s):  
Interest Rates ◽  
Positive Relationship ◽  
Formal Model ◽  
Natural Rate ◽  
Market Rate ◽  
Long Run ◽  
Advanced Economies ◽  
The Uk ◽  
Gibson Paradox ◽  
The Relationship

We examine the relationship between prices and interest rates for seven advanced economies in the period up to 1913, emphasising the UK. There is a significant long-run positive relationship between prices and interest rates for the core commodity standard countries. Keynes ([1930] 1971) labelled this positive relationship the ‘Gibson Paradox’. A number of theories have been put forward as possible explanations of the paradox but they do not fit the long-run pattern of the relationship. We find that a formal model in the spirit of Wicksell (1907) and Keynes ([1930] 1971) offers an explanation for the paradox: where the need to stabilise the banking sector's reserve ratio, in the presence of an uncertain ‘natural’ rate, can lead to persistent deviations of the market rate of interest from its ‘natural’ level and consequently long-run swings in the price level.

scholarly journals Persistent Liquidity Effects and Long-Run Money Demand

2014 ◽  
Vol 6 (2) ◽  
pp. 71-107 ◽  
Author(s):  
Fernando Alvarez ◽  
Francesco Lippi
Keyword(s):  
Interest Rates ◽  
Money Demand ◽  
Asset Markets ◽  
Propagation Mechanism ◽  
Monetary Model ◽  
Long Run ◽  
Short Run ◽  
The Stability ◽  
Two Parameters

We present a monetary model with segmented asset markets that implies a persistent fall in interest rates after a once-and-for-all increase in liquidity. The gradual propagation mechanism produced by our model is novel in the literature. We provide an analytical characterization of this mechanism, showing that the magnitude of the liquidity effect on impact, and its persistence, depend on the ratio of two parameters: the long-run interest rate elasticity of money demand and the intertemporal substitution elasticity. The model simultaneously explains the short-run “instability” of money demand estimates as well as the stability of long-run interest-elastic money demand. (JEL E13, E31, E41, E43, E52, E62)

scholarly journals Asymmetric Macroeconomic Shocks and Asset Price Behaviors in Selected African Countries

2021 ◽  
Vol 11 (2) ◽  
pp. 90
Author(s):  
Saliu Mojeed Olanrewaju ◽  
Ogunleye Edward Oladipo
Keyword(s):  
Real Estate ◽  
Interest Rates ◽  
Asset Prices ◽  
Asset Price ◽  
Panel Cointegration ◽  
African Countries ◽  
Vector Autoregressive ◽  
Macroeconomic Variables ◽  
Real Estate Prices ◽  
The Relationship

This study examines the relationship between Asset prices (Stock and Real estate prices) and Macroeconomic variables in four selected African countries. The study employs the Westerlund Error Correction Based Panel Cointegration test and Eight-variable Structural Vector Autoregressive model to examine the relationship between asset prices and macroeconomic variables. Findings from the study confirm that no long-run relationship exists between both Asset prices and macroeconomic variables. The study equally reveals that portfolio diversification benefits of both stock and real estate markets are more pronounced in the period of a boom than the recession period in Africa. The results also show that GDP growth rate shock exerts a significant impact on both asset prices during expansion and recession periods. The study reveals that foreign interest rates and World oil price shocks are better predictors of both stock and real estate prices during the crisis period than in the expansion period.

scholarly journals A New Approach to Gauging Inflation Expectations

2009 ◽  
pp. 1-4
Author(s):  
Joseph G. Haubrich
Keyword(s):  
Interest Rates ◽  
Risk Premium ◽  
New Method ◽  
Inflation Expectations ◽  
Real Interest Rates ◽  
Inflation Risk ◽  
New Approach ◽  
Expected Inflation ◽  
Inflation Risk Premium

This Economic Commentary explains a relatively new method of uncovering inflation expectations, real interest rates, and an inflation-risk premium. It provides estimates of expected inflation from one month to 30 years, an estimate of the inflation-risk premium, and a measure of real interest rates, particularly a short (one-month) rate, which is not readily available from the TIPS market. Calculations using the method suggest that longer-term inflation expectations remain near historic lows. Furthermore, the inflation-risk premium is also low, which in the model means that inflation is not expected to deviate far from expectations.

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