scholarly journals THE FEDERAL RESERVE’S MONETARY POLICY AND ITS EFFECTS (2008-2020): AN AUSTRIAN PERSPECTIVE

2021 ◽  
pp. 59-85
Author(s):  
André Marques
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Federal Reserve ◽  
Quantitative Easing ◽  
Interest Rate Policy ◽  
Rate Policy

Este paper tem como objetivo descrever, segundo a Escola Austríaca de Economia, como as políticas monetárias adotadas pelo Federal Reserve a partir de 2008 (Quantitative Easing – QE, Qualitative Easing – QL e Zero Percent Interest Rate Policy – ZIRP) prolongaram os desajustes na alocação de recursos, enfraqueceram a economia americana (indivíduos e empresas tornaram-se mais dependentes de juros artificialmente baixos) e aumentaram os riscos e a alavancagem presentes no mercado financeiro. Argumenta-se que, após a adoção destas políticas, o Fed não seria capaz de normalizar a política monetária, o que se confirmou em 2019, quando Fed voltou a diminuir o FFR e a realizar QE, e, sobretudo, em 2020, quando retornou ao ZIRP e aumentou o QE. Conclui-se, portanto, que o Fed enfraquece a economia e aumenta a alavancagem do mercado financeiro. A economia real é prejudicada em detrimento do mercado financeiro (grandes empresas de capital aberto e instituições financeiras) e do governo (que aumenta seus gastos e endividamento). Palavras-Chave: Escola Austríaca de Economia, Estados Unidos, Bancos Centrais, Federal Reserve, Política Monetária, Ciclos Económicos. Classificação JEL: E14, E32, E43, E44, E52, E58, E62, H60.

scholarly journals Negative Interest Rate Risk. Atavism or Normalization of Central Banks’ Monetary Policy

2019 ◽  
Vol 3 (342) ◽  
pp. 89-116
Author(s):  
Irena Pyka ◽  
Aleksandra Nocoń
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Central Banks ◽  
Interest Rate Risk ◽  
Interest Rate Policy ◽  
Rate Policy ◽  
Negative Interest Rate Policy

In the face of the global financial crisis, central banks have used unconventional monetary policy instruments. Firstly, they implemented the interest rate policy, lowering base interest rates to a very low (almost zero) level. However, in the following years they did not undertake normalizing activities. The macroeconomic environment required further initiatives. For the first time in history, central banks have adopted Negative Interest Rate Policy (NIRP). The main aim of the study is to explore the risk accompanying the negative interest rate policy, aiming at identifying channels and consequences of its impact on the economy. The study verifies the research hypothesis stating that the risk of negative interest rates, so far unrecognized in Theory of Interest Rate, is a consequence of low effectiveness of monetary policy normalization and may adopt systemic nature, by influencing – through different channels – the financial stability and growth dynamics of the modern world economy.

Monetary Policy's Influence on Real Estate Price in China: An Analysis Based on VAR Model

2013 ◽  
Vol 850-851 ◽  
pp. 1003-1007
Author(s):  
Xiong Song He ◽  
Guo Lin Deng
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Real Estate ◽  
Money Supply ◽  
Var Model ◽  
Response Analysis ◽  
Interest Rate Policy ◽  
The Real Estate ◽  
Real Estate Price ◽  
Rate Policy

Monetary policy has a significant effect on real estate price, and monetary policymakers need to have quick response. Based on the assumptions that monetary policy and real estate price influence each other and variables affect one another with a lag, A VAR model is designed and modified. Through impulse-response analysis and variance analysis, the influence of money supply and that of interest rate on real estate price are tested and compared. We found that: both money supply and interest rate could affect the real estate price; interest rate has a bigger influence that money supply does; as time goes on, the influence of money supply changes little, but that of interest rate enhances; interest rate policy is not easy to control and it will lead to a fluctuation of economy and the fluctuation may enhance, money supply is a better method to regulate real estate industry instead.

LEARNING, HEDGING, AND THE NATURAL RATE HYPOTHESIS

2017 ◽  
Vol 23 (5) ◽  
pp. 2009-2034 ◽  
Author(s):  
Thomas E. Cone ◽  
Paul Shea
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Financial Sector ◽  
Risk Averse ◽  
Parameter Change ◽  
Natural Rate ◽  
Interest Rate Policy ◽  
Fixed Price ◽  
Future Production ◽  
Rate Policy

We assume that firms are more risk averse than households and that they manage their risk through a financial sector, which consists of learning and hedging. Firms that learn (by observing demand shocks) face less uncertainty and produce more than firms that hedge (by selling future production at a fixed price). If a policy or parameter change stabilizes the economy, then there is less learning and usually less production. Welfare, however, is usually maximized when the financial sector, which requires inputs but does not directly provide utility or affect production, is smallest. Monetary policy can improve welfare by either taxing learning or subsidizing hedging. If firms are risk averse over nominal profits instead of real profits, then interest rate policy can also improve welfare by stabilizing prices and thus minimizing the size of the financial sector.

scholarly journals Monetary Policy Shocks in the Russian Economy and Their Macroeconomic Effects

2019 ◽  
Vol 14 (4) ◽  
pp. 48-75
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Empirical Evidence ◽  
Monetary Policy Shocks ◽  
Interest Rate Policy ◽  
Russian Economy ◽  
Policy Shocks ◽  
Rate Policy ◽  
The Interest Rate

This section conducts an estimate of the impulse response function of key macroeconomic variables to monetary policy shocks in Russia. The estimates are carried out through a dynamic factor model (DFM) of the Russian economy with structural identification of shocks by imposing various sets of sign restrictions on the behavior of endogenous variables. We restricted first the monetary aggregate M2 only (a decrease in response to an increase of the Key rate), and then—simultaneously—M2, real effective exchange rate (an increase), and GDP (a decrease). We estimated the DFM using a large dataset of 58 macroeconomic and financial variables. The estimation results suggest that there is no decreasing response of consumer prices to an exogenous tightening of the interest rate policy of the Central Bank of Russia. This empirical evidence is supported implicitly by DFM-based predictions that under the imposition of such a decreasing response as an identifying restriction to the model, a positive interest rate shock is not transmitted through the interest rate channel of monetary policy to expected increases of the interest rates on commercial loans and private deposits. However, existing empirical evidence refutes this model-based result. Therefore, this study supports the view according to which a tightening of monetary policy in Russia is inefficient in terms of restraining inflation. In addition, monetary policy shocks negatively affect investments, retail sales, export and import, real wages, and employment. Different economic activities react differently to monetary policy shocks: export-oriented activities are not sensitive to these shocks, whereas domestic pro-cyclical activities (e.g. construction) can be substantially depressed in response to unexpected increases of interest rates. Finally, the expectations of economic agents are also significantly affected by shocks in the interest rate policy of the Bank of Russia.

scholarly journals THE EFFECTIVENESS OF THE FUNCTIONING OF THE INTEREST RATE CHANNEL OF MONETARY TRANSMISSION IN UKRAINE

2021 ◽  
Author(s):  
Volodymyr Mishchenko ◽  
Svitlana Naumenkova ◽  
Svitlana Mishchenko
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Operating Conditions ◽  
Monetary Transmission ◽  
Basic Principles ◽  
Interest Rate Policy ◽  
National Bank ◽  
Rate Policy ◽  
The Interest Rate ◽  
Interest Rate Channel

Ensuring a high level of monetary regulation of the economy and improving the efficiency of the central bank's monetary policy largely depend on how effective is the mechanisms of transmission of monetary impulses from the decisions of monetary authorities to market participants through the use of monetary transmission. Given that in the current environment, interest rate policy is the main component of the monetary policy of the vast majority of central banks, interest rate channel is important in the process of monetary transmission. This is also due to the fact that in the monetary transmission system, the interest channel is most closely linked to the mechanisms of functioning of monetary, credit and currency channels. Solving this problem requires the identification the role of the interest channel in the mechanism of monetary transmission, the peculiarities of its function in current conditions, revealing clear causal links and the basic principles of the systematic regularity of monetary development. In addition, it is necessary to identify clear criteria and methods for assessing the effectiveness of the channel, as well as systems and indicators, which allow the use of several parameters in the flow of interest to the channel on the basis of monetary and macroeconomic indicators. The conducted research is based on the statistics of the National Bank of Ukraine for 2005-2020, the system of economic-statistical and economic-mathematical methods, as well as on the calculation of indicators, and is characterize the reliability of models. Quantitative assessment of the efficiency and operating conditions of the interest rate channel of the monetary transmission mechanism should be based on the basic principles of monetary theory and a reliable statistical base. This suggests ways to improve the efficiency of the interest rate channel through the central bank's interest rate policy, adequate money market conditions, and prudent government borrowing policies in the domestic market to ensure efficient transmission of monetary impulses from the central bank to the real sector of the economy. The results of the study can be used to substantiate the forecast parameters of monetary indicators of the monetary policy of the National Bank of Ukraine (NBU) and the conditions of effective functioning of the interest rate channel of monetary transmission in Ukraine in the medium term.

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