Illustrating the Grondona System in Operation

2022 ◽  
pp. 126-132
Keyword(s):  
Money Supply ◽  
Commodity Market ◽  
Market Prices

While working in Japan during the 1990s, one of the authors took the opportunity to collect data on past Japanese commodity imports and recent commodity market prices and to use them to simulate how a CRD would have operated over the decade 1987 – 1996 using a computer spreadsheet. The graphs showing the results are easy to understand: the CRD would have bought reserves when Yen prices were falling and sold them when Yen prices were rising, thereby exerting a stabilizing influence on the prices and quantities of these imported commodities. In parallel, by expanding and contracting the money supply counter-cyclically, the system would have helped to stabilize the overall economy.

Macroeconomic Determinants of Stock Market Prices in Nepal

2020 ◽  
Vol 2 (1) ◽  
pp. 56-65
Author(s):  
Bhim Prasad Panta
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Stock Market ◽  
Money Supply ◽  
Developing Economies ◽  
Annual Data ◽  
Economic Variables ◽  
Market Prices ◽  
Ardl Model ◽  
Long Run

Background: Stock market plays a crucial role in the financial system of a country. It can be viewed as a channel through which resources are properly channelized. It enables the governments and industry to raise long-term capital for financing new projects. The stock markets of developing economies are likely to be sensitive to various macro-economic factors such as GDP, imports, exports, exchange rates etc., when there is high demand on financial products, as a constituent of financial market, ultimately stock market needs to develop. Many factors can be a signal to stock market participants to expect a higher or lower return when investing in stock and one of these factors are macroeconomic variables and thus, macro-economic variables tend to effect on stock market development. Objective: This study examines the linkage between stock market prices (NEPSE index) and five macro-economic variables, namely; real GDP, broad money supply, interest rate, inflation, and exchange rate using ARDL model and to explain the behavior of the Nepal Stock Exchange Index. Methods: The ECM which is delivered from ARDL model through simple linear transformation to integrate short run adjustments with long run equilibrium without losing long run information. The analysis has been done by using 25 years' annual data from 1994 to 2019. Findings: The result suggests that the fluctuation of Nepse Index in long run is strongly associated with broad money supply, interest rate, inflation, and exchange rate. Conclusion: Though Nepalese stock market is in primitive stage, broad money supply, interest rate, inflation and exchange rate are major factors affecting stock market price of Nepal. So, policies and strategies should be made and directed taking these in to consideration. Implication: The findings of research can be helpful to understand the behavior of Nepalese stock market and develop policies for market stabilization.

scholarly journals Modelling Macroeconomic Determinants Of Stock Market Prices: Evidence From Namibia

2012 ◽  
Vol 28 (5) ◽  
pp. 871 ◽  
Author(s):  
Joel Hinaunye Eita
Keyword(s):  
Stock Market ◽  
Interest Rates ◽  
Money Supply ◽  
Stock Prices ◽  
Economic Activity ◽  
Market Price ◽  
Font Size ◽  
Market Prices ◽  
Econometric Methodology ◽  
Macroeconomic Determinants

<span style="font-family: Times New Roman; font-size: small;"> </span><p style="margin: 0in 0.5in 0pt; text-align: justify; mso-pagination: none;" class="MsoNormal"><span lang="EN-GB" style="color: black; font-size: 10pt; mso-ansi-language: EN-GB; mso-themecolor: text1;"><span style="font-family: Times New Roman;">This paper investigates the macroeconomic determinants of stock market prices in Namibia. The investigation was conducted using a VECM econometric methodology and revealed that Namibian stock market prices are chiefly determined by economic activity, interest rates, inflation, money supply and exchange rates.<span style="mso-spacerun: yes;"> </span>An increase in economic activity and the money supply increases stock market prices, while increases in inflation and interest rates decrease stock prices.<span style="mso-spacerun: yes;"> </span>The results suggest that equities are not a hedge against inflation in Namibia, and contractionary monetary policy generally depresses stock prices.<span style="mso-spacerun: yes;"> </span>Increasing economic activity promotes stock market price development.</span></span></p><span style="font-family: Times New Roman; font-size: small;"> </span>

Discussion of CRD Simulation Results

2022 ◽  
pp. 159-170
Keyword(s):  
Money Supply ◽  
Foreign Exchange ◽  
Indirect Effects ◽  
Gold Standard ◽  
Commodity Prices ◽  
Consistent Pattern ◽  
Direct And Indirect Effects ◽  
Market Prices ◽  
Simulation Results

The results of the simulations shown in Chapter 10 clearly show the consistent pattern of operation of the Grondona system, buying and selling reserves of commodities in response to changes in market prices as reliably as under a gold standard. This has a range of direct and indirect effects which are discussed in this chapter, including the reliably counter-cyclical timing of changes in the quantity of the CRD's reserves, and the parallel changes in the national money supply, the system's contribution to resisting inflationary pressures, and the effect of a CRD's reserves of a commodity falling to zero. Some remaining uncertainties about the system's operation are also discussed, notably about the foreign exchange market's likely response to the system expanding the money supply when commodity prices are falling.

scholarly journals Stock market’s reaction to money supply: a nonparametric analysis

2015 ◽  
Vol 19 (5) ◽  
Author(s):  
Abderrahim Taamouti
Keyword(s):  
Monetary Policy ◽  
Stock Market ◽  
Stock Returns ◽  
Money Supply ◽  
Nonparametric Analysis ◽  
Stylized Facts ◽  
Market Prices ◽  
Policy Measures ◽  
Entire Distribution

AbstractWe empirically investigate the link between monetary policy measures and stock market prices. We document the following stylized facts about stock market’s reaction to money supply and examine the effect across the entire distribution of stock returns. Using a

scholarly journals Commodity Market Prices and Its Impact on Exchange Rate of Pakistan

2021 ◽  
Vol 3 (1) ◽  
pp. 31-39
Author(s):  
ASAD SARFARAZ KHAN ◽  
DR. SHAKIL IQBAL AWAN ◽  
DR. SYED ABDUL MOIZ
Keyword(s):  
Exchange Rate ◽  
Current Account Deficit ◽  
Commodity Market ◽  
Market Prices ◽  
Monthly Data ◽  
Short Run ◽  
The Exchange Rate ◽  
The Relationship ◽  
A Current

Pakistan’s economy and exchange rate has experienced many ups and downs in the last ten years. The exchange rate has depreciated from Rs.59/$ to Rs.104/$. This is causing a massive dent to Pakistan economy. According to the State Bank of Pakistan, Pakistan is consistently facing a current account deficit for the last several years and a depreciated currency is one of the main reasons for the deficit. This study analyzes the relationship between the commodity market prices and exchange rates in Pakistan both in long and in short run. This research utilized the monthly data for the past ten years from Jan-2006 to Dec-2015. The results are quite surprising because in Pakistan, none of the prices of the commodities (i-e oil and gold) have short term relationship with the exchange rate of Pakistan. This study also does not find any long-term relationship among the variables.

Faktor-Faktor Yang Mempengaruhi Nilai Tukar Dollar Amerika Serikat Terhadap Rupiah Tahun 2000–2013

2017 ◽  
Vol 1 (2) ◽  
pp. 177-191
Author(s):  
Rizki Rahma Kusumadewi ◽  
Wahyu Widayat
Keyword(s):  
Time Series ◽  
Exchange Rate ◽  
Money Supply ◽  
Time Series Data ◽  
The United States ◽  
Economic Conditions ◽  
Series Data ◽  
Arch Model ◽  
United States Dollar ◽  
The Exchange Rate

Exchange rate is one tool to measure a country’s economic conditions. The growth of a stable currency value indicates that the country has a relatively good economic conditions or stable. This study has the purpose to analyze the factors that affect the exchange rate of the Indonesian Rupiah against the United States Dollar in the period of 2000-2013. The data used in this study is a secondary data which are time series data, made up of exports, imports, inflation, the BI rate, Gross Domestic Product (GDP), and the money supply (M1) in the quarter base, from first quarter on 2000 to fourth quarter on 2013. Regression model time series data used the ARCH-GARCH with ARCH model selection indicates that the variables that significantly influence the exchange rate are exports, inflation, the central bank rate and the money supply (M1). Whereas import and GDP did not give any influence.

National Currency Appreciation and Growth of the Russian Economy

2004 ◽  
pp. 95-111
Author(s):  
T. Zolotoukhina
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Money Supply ◽  
Capital Flows ◽  
National Currency ◽  
Economic Factors ◽  
Exchange Market ◽  
Russian Economy ◽  
Macroeconomic Indicators

The problem of interaction between Russian currency appreciation and positive dynamics of macroeconomic indicators is studied. Main economic factors of ruble appreciation are analyzed. Consequences of the Russian Central Bank's policy directed to oppose ruble appreciation and problems in financial area due to the increase of money supply through the exchange market are considered. Influence of exchange rate appreciation on economic growth, inflation, export, import, capital flows are discussed. It is concluded that Russian ruble appreciation stimulates an increase in efficiency of the Russian economy.

Investment Processes in the Russian Economy

2004 ◽  
pp. 4-27 ◽  
Author(s):  
V. Lisin
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Money Supply ◽  
Capital Flows ◽  
Economic Factors ◽  
Exchange Market ◽  
Russian Economy ◽  
Macroeconomic Indicators

The problem of interaction between Russian currency appreciation and positive dynamics of macroeconomic indicators is studied. Main economic factors of ruble appreciation are analyzed. Consequences of the Russian Central Bank's policy directed to oppose ruble appreciation and problems in financial area due to the increase of money supply through the exchange market are considered. Influence of exchange rate appreciation on economic growth, inflation, export, import, capital flows are discussed. It is concluded that Russian ruble appreciation stimulates an increase in efficiency of the Russian economy.

The end of Alchemy of Finance and Sovereign Money (on the books by M. King “The end of Alchemy: Money, Banking and the Future of the Global Economy” and by J. Huber “Sovereign Money. Beyond Reserve Banking”)

2017 ◽  
pp. 131-141 ◽  
Author(s):  
V. Yefimov
Keyword(s):  
Economic Policy ◽  
Central Bank ◽  
Institutional Theory ◽  
Money Supply ◽  
Government Spending ◽  
Global Economy ◽  
Private Banks ◽  
Money Creation ◽  
Ministry Of Finance ◽  
Reserve Banking

The review discusses the institutional theory of money considered in the books by King and Huber, and the conclusions that follow from it for economic policy. In accordance with this theory, at present the most of the money supply is created not by the Central Bank but by private banks. When a bank issues a loan, new money is created, and when the loan is repaid this money is destructed. The concept of sovereign money involves the monopoly of money creation of the central bank. In this case the most of newly created money is handed over to the ministry of finance to implement government spending.

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