scholarly journals Social Welfare Implication of Monetary Policies through Exchange Rate Channel

2018 ◽  
Vol 8 (2) ◽  
pp. 107-144
Author(s):  
정규철
Keyword(s):  
Exchange Rate ◽  
Social Welfare ◽  
Monetary Policies ◽  
Welfare Implication

scholarly journals Coordination Effects and Optimal Policy Choices of Macroprudential Policy and Monetary Policy

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-11
Author(s):  
Haifeng Pan ◽  
Dingsheng Zhang
Keyword(s):  
Monetary Policy ◽  
Social Welfare ◽  
Optimal Policy ◽  
Real Estate Market ◽  
Macroprudential Policy ◽  
Monetary Policies ◽  
Policy Rules ◽  
Monetary Policy Rules ◽  
Macroprudential Policies ◽  
Dynamic Stochastic

Considering three monetary policy rules, together with two endogenous macroprudential policies that are credit constraints (loan to value, LTV) for households and counter-cyclical capital (capital requirement ratio, CRR) for bankers, this paper establishes a dynamic stochastic general equilibrium (DSGE) model. Based on the welfare analysis of different combinations of macroprudential rules and monetary policy rules, this paper identifies the optimal policy combinations and analyzes the coordination effects between macroprudential policies and monetary policies. The results show that no matter what kind of monetary policy rules is implemented, the introduction of macroprudential rules has improved the level of total social welfare. In the optimal “two pillars” framework of monetary policies and macroprudential rules, the main objective of monetary policy is to stabilize price inflation, and the macroprudential policy to be implemented is the CRR macroprudential policy. This combination can effectively promote the stability of the real estate market, financial market, and macroeconomy, while maximizing the improvement of total social welfare.

scholarly journals Trade Balance and Exchange Rate in Thailand & the Implications for Vietnam: An Application using Instrumental Variable and the Heterogeneous Panel Cointegration Methods

2016 ◽  
Vol 23 (01) ◽  
pp. 137-160
Author(s):  
Anh Vo The ◽  
Duc Vo Hong
Keyword(s):  
Exchange Rate ◽  
Trade Balance ◽  
Panel Cointegration ◽  
Least Square ◽  
Monetary Policies ◽  
Ordinary Least Square ◽  
Long Run ◽  
Trading Partners ◽  
The Exchange Rate ◽  
Heterogeneous Panel

This study aims to investigate the link of trade balance and exchange rate for the case of Thailand in different aspects by initially attempting to examine what factors determine the trade balance in Thailand and then to test the long-run relationship between the exchange rate and Thailand’s trade balance. The empirical findings indicate that the exchange rate and relative growth rate of income play central roles in explaining Thailand’s trade balance, and fiscal and monetary policies are beneficial in some cases. Additionally, panel fully modified ordinary least square (FMOLS) estimations illustrate that a devaluation of Thailand Baht offers a significantly positive improvement on its trade balance in the long run, especially for the groups of countries with upper middle and high income in America and Europe. Individual FMOLS regressions of Thailand’s trade balance and each of its 62 trading partners suggest that a devaluation of Thailand’s currency would stimulate Thailand’s trade performance with over 20 trading partners, but hurt its performance with the other 10 countries and be inconclusive to the others.

Stock prices, exchange rate and interest rate: evidence beyond symmetry

2017 ◽  
Vol 9 (1) ◽  
pp. 2-19 ◽  
Author(s):  
Taufeeq Ajaz ◽  
Md Zulquar Nain ◽  
Bandi Kamaiah ◽  
Naresh Kumar Sharma
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Stock Prices ◽  
Asset Price ◽  
Asymmetric Reaction ◽  
Monetary Policies ◽  
Content Type ◽  
Financial Variables ◽  
Distributed Lag ◽  
Indian Context

Purpose This paper aims to examine the dynamic interactions between monetary and financial variables in the Indian context. Design/methodology/approach In this paper, the authors have applied a recently developed asymmetric autoregressive distributed lag (ARDL) model by Shin et al. (2014), for detecting nonlinearities focusing on the long-run and short-run asymmetries among economic variables. Findings The results point toward the presence of asymmetric reaction of stock prices to changes in interest rate and exchange rate in full sample, as well as in pre-crisis. However, no asymmetry was found in the post-crisis period. The results further suggest that tight monetary policies appear to retard the stock prices, more than easy monetary policies that stimulate them. Practical implications The findings of the study can be helpful in understanding the policy transmission mechanism through asset price channel. Originality/value To the best of the authors’ knowledge, this is the first study that examines the interactions between monetary and financial variables in the Indian context in an asymmetric framework. The findings of this study are quite interesting and are different from several existing studies in the literature.

Modeling the Effect of Exchange Rate Liberalization on China’s Macro Economy

2017 ◽  
Vol 21 (5) ◽  
pp. 769-777
Author(s):  
Xiaowen Hu ◽  
◽  
Duanming Zhou ◽  
Chengchen Hu ◽  
Fei Ai
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Social Welfare ◽  
Function Analysis ◽  
General Equilibrium Theory ◽  
Interest Rate Shocks ◽  
Dynamic Stochastic ◽  
The Government ◽  
The Impact ◽  
Domestic Interest Rate

The empirical characteristics of domestic and foreign interest rate shocks are obtained by using VAR method: the domestic interest rate regulation is counter-cyclical, and the increase of foreign interest rate leads to the increase of domestic output and inflation. On this basis, we construct a small open dynamic stochastic general equilibrium theory framework which reflects the empirical characteristics, including exchange rate control, to analyze the macroeconomic effects of exchange rate liberalization reform. By volatility simulation, impulse response and social welfare loss function analysis, the empirical results show that: firstly, exchange rate reform would increase volatility of output and exchange rate, but reduce volatility of inflation and interest rate. Secondly, exchange rate reform enhances the impact of domestic interest rate shocks on output and inflation. Which means the reform would improve the control ability of interest rate as a monetary policy tool. Moreover, the reform increases loss of social welfare. The conclusion shows that the exchange rate liberalization should be implemented step by step. The government should accelerate the reform when the external macro economy is stable. Otherwise it will cause a larger economic volatility.

scholarly journals Estimating the Impact of Devaluation the Exchange Rate on Inflation: A Cause Study of Iraq Using ARDL Model

Webology ◽  
2021 ◽  
Vol 18 (2) ◽  
pp. 475-486
Author(s):  
Niam A. Fawaz ◽  
Saad A. Hamaad
Keyword(s):  
Exchange Rate ◽  
Budget Deficit ◽  
Balance Of Payments ◽  
General Level ◽  
Monetary Policies ◽  
Ardl Model ◽  
Currency Exchange ◽  
Import And Export ◽  
The Exchange Rate ◽  
The Impact

The exchange rate tool is one of the most important macroeconomic tools that affect many variables, including the general level of prices, investment, import and export. In the case of a deteriorating economy such as the Iraqi economy, which suffers from a high import rate of final goods and intermediate goods, which are considered inputs to production processes, means exit Foreign exchange to abroad that affects the position of the balance of payments and its imbalance. It is very abnormal for countries to reduce the value of their currency exchange for financing reasons related to financing their public budget deficit without taking into account macroeconomic variables. All of these matters reflect a clear confusion of the fiscal and the monetary policies. The results of the current study by using the ARDL model have proven the direct impact of currency devaluation on inflation.

scholarly journals MONETARY POLICY RULES IN MALAYSIA, SINGAPORE AND THAILAND

2020 ◽  
Vol 23 (4) ◽  
pp. 565-596
Author(s):  
Chai-Thing Tan ◽  
Azali Mohamed
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Government Spending ◽  
Taylor Rule ◽  
Central Banks ◽  
Monetary Policies ◽  
Policy Rules ◽  
Monetary Policy Rules ◽  
The Exchange Rate ◽  
Monetary Policy Reaction Function

This paper investigates whether monetary policies in Malaysia, Thailand and Singapore are best represented by either the Taylor rule or the augmented Taylor rule. It finds that the augmented Taylor rule, which incorporates the exchange rate and government spending, best represents monetary policies in these countries. The results show that past inflation and the output gap play a role in the monetary policy reaction function in Malaysia and Thailand. The results further show a strong preference towards interest rate smoothing, government spending, and the exchange rate by the central banks.

The Efficacy of Fiscal Vs Monetary Policies in the Asia-Pacific Region: The St. Louis Equation Revisited

2021 ◽  
pp. 097226292110541
Author(s):  
Ghanashyama Mahanty ◽  
Dwijendra Nath Dwivedi ◽  
Badri Narayanan Gopalakrishnan
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Exchange Rate ◽  
The Other ◽  
Asia Pacific ◽  
Fiscal Policies ◽  
Pacific Region ◽  
Relative Importance ◽  
Asia Pacific Region ◽  
Monetary Policies

This study’s main objective is to assess the relative importance of fiscal and monetary policies on the Asia-Pacific Economies. We have empirically investigated both the original St. Louis equation and its expanded version to study the comparative relevance of one over the other. Our empirical results indicate that both monetary and fiscal policies are essential in promoting economic growth. In both models, monetary policy is more effective than fiscal policy. In the expanded St. Louis model, exports, exchange rate and inflation variables substantially impact gross domestic product than the conventional monetary and fiscal measures.

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