scholarly journals Why is inflation targeting adopted?

2020 ◽  
Vol 12 (1) ◽  
pp. 56
Author(s):  
Yutaka Kurihara
Keyword(s):  
Developing Countries ◽  
Exchange Rate ◽  
Central Bank ◽  
Inflation Targeting ◽  
Developed Countries ◽  
The Other ◽  
Other Hand ◽  
Central Bank Credibility

Since the early 1990s, inflation targeting (IT) has been conducted in many countries and the number of the countries has been increasing rapidly. The outcomes of adopting IT has been discussed, however, the incentives of adopting IT is not fully examined. This study focuses on this issue empirically. The results are clearly divided into two types of countries. In developed countries, budget/GDP ratio, central bank credibility, exchange rate stability, and openness of the economy are deterministic elements of adopting IT, however interestingly, inflation itself does not play any roles of adopting IT. On the other hand, only inflation is the deterministic element of adopting IT in developing countries. Other elements, that are deterministic elements in developed countries, do not any effects on introducing IT. Moreover, countries would not like to limit the scope of policies when the economy’s openness is high.

The Liquidity Trap, Democracy and Central Bank Independence

2014 ◽  
Vol 61 (1) ◽  
pp. 16-29
Author(s):  
Lucian Croitoru
Keyword(s):  
Financial Crisis ◽  
Central Bank ◽  
Developed Countries ◽  
Central Banks ◽  
Central Bank Independence ◽  
The Other ◽  
Quantitative Easing ◽  
Potential Conflict ◽  
Liquidity Trap ◽  
Other Hand

Abstract In the wake of the financial crisis, central banks in developed countries performed unconventional operations that are fiscal in nature. On one hand, we support the view that such operations, which are not fully democratic, might lead to loss of central bank operational independence and discuss some difficulties that central banks might face when reversing quantitative easing. On the other hand, we show that, in the middle of a financial crisis, such operations are best performed by central banks. To avoid this potential conflict, the society needs to identify the best means by which the responsibility for quasi-fiscal operations implemented by the central bank is transferred to a democratic structure

scholarly journals Effect of 1972 Devaluation on Pakistan's Balance of Trade

1975 ◽  
Vol 14 (1) ◽  
pp. 1-22
Author(s):  
A. R. Kemal ◽  
Zahira Alvie
Keyword(s):  
Developing Countries ◽  
Industrial Structure ◽  
Developing Economies ◽  
Exchange Rate Regime ◽  
Developed Countries ◽  
World Market ◽  
The Other ◽  
Beneficial Effects ◽  
Other Hand ◽  
Long Run

In most of the developing economies, a rapid growth of G.N.P. invariably implies a larger import bill. Capital goods necessary for development have to be imported and a higher level of income in turn implies an increase in the import of consumption goods. On the other hand, demand for primary goods, which are main exports of developing countries, is inelastic. Moreover, the develop¬ing countries face serious problems in selling their manufactured products in the world market, partly due to their relatively inefficient industrial structure and partly due to the restrictive import policies of the developed countries. This results in a deficit in the balance of payments of many developing countries. To meet the deficit, import restrictions and export encouragement policies are followed instead of devaluation, which is resisted on both economic and non- economic grounds. This study has as its objective an analysis of the effects of the: devaluation of Pakistani rupee in May 1972, which changed the par value of Pakistan's rupee from Rs. 4.76 to Rs. 11.00 per U.S. dollar. Prior to the 1972 devaluation, imports were restricted through tariffs and quotas. In addition, certain pro¬ducts could be imported only under bonus and cash-cum-bonus lists. On the other hand, exports were encouraged through Export Bonus Scheme, Pay-As- You-Earn Scheme, and similar other incentives. These measures led to a multiple exchange rate regime. These measures may have had some beneficial effects in the short run but as Soligo and Stern [26] have shown over the long run, they led to a misallocation of resources. Pakistan devalued her currency in May 1972, as stated by the then Minister of Finance in his speech, to end the flow of foreign exchange abroad, stop over invoicing of imports and under invoicing of exports, correct the misallocation of resources, curb uneconomic import

scholarly journals Urgency of Licensing Restriction in Joint Venture Companies Related to TKDN

2019 ◽  
Vol 3 (1) ◽  
pp. 1-7
Author(s):  
Toebagus Galang Windi Pratama
Keyword(s):  
Developing Countries ◽  
Technology Transfer ◽  
Joint Venture ◽  
Free Market ◽  
Legal Protection ◽  
Developed Countries ◽  
The State ◽  
The Other ◽  
Global Era ◽  
Other Hand

Most companies that market their products in Indonesia in order to pass TKDN using the concept of Joint Venture agreements (PMA) often the parties working together are unbalanced in real terms the shares of foreign owners are greater than domestic shareholders. In such conditions the strong parties tend to impose their will on the weaker party. Therefore, according to the principle of freedom of contact in relation to the free market, in fully contracting is an affair of the parties, however legal protection and public interest are therefore required from government interference in the form of regulation or restrictions. The restrictions in regulating technology transfer from developed countries to developing countries aim to protect the interests of countries that divert technology because the inventor of the technology is considered to have made maximum efforts to find related technology but on the other hand the state is also obliged to protect and improve the welfare of its citizens from that, restrictions on patent licenses are needed so that the TKD is truly "real" and does not reduce the incoming FDI.Based on this, the authors formulated a number of issues namely: Why are restrictions on patent licenses needed and What are the legal consequences of limiting patent licenses . The results of the discussion show that the transfer of technology is needed for developing countries needed to advance their products in the era of globalization so that arrangements for it are needed so that in case of cooperation there is no inequality. And, the role of law in the policy of technology transfer to transform agrarian societies into industrialist societies. Here there is a dilemmatic situation on the one hand the acceleration of mastery of technology including the acceleration of development needs to be done by being open to the owners of capital and technology (which generally comes from developed countries), while on the other hand we still have to maintain national interests. Here is related to the authority of the state to regulate the process of technology transfer. In this global era, after the WTO agreement was reached, which was linked to 2 (two) technology transfer agendas, namely TRIMS and TRIPS. Foreign technology protection was very much needed in the context of foreign investment.

The influence of inflation targeting on the pass-through effect of the exchange rate

2018 ◽  
pp. 70-84
Author(s):  
Ph. S. Kartaev ◽  
Yu. I. Yakimova
Keyword(s):  
Developing Countries ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Inflation Targeting ◽  
Policy Regime ◽  
Short And Long Term ◽  
The Exchange Rate ◽  
Pass Through ◽  
The Impact

The paper studies the impact of the transition to the inflation targeting regime on the magnitude of the pass-through effect of the exchange rate to prices. We analyze cross-country panel data on developed and developing countries. It is shown that the transition to this regime of monetary policy contributes to a significant reduction in both the short- and long-term pass-through effects. This decline is stronger in developing countries. We identify the main channels that ensure the influence of the monetary policy regime on the pass-through effect, and examine their performance. In addition, we analyze the data of time series for Russia. It was concluded that even there the transition to inflation targeting led to a decrease in the dependence of the level of inflation on fluctuations in the ruble exchange rate.

Islamic hedging for pilgrimage funds: case of Indonesia

2019 ◽  
Vol 11 (3) ◽  
pp. 328-341
Author(s):  
Rifki Ismal ◽  
Nurul Izzati Septiana
Keyword(s):  
Exchange Rate ◽  
The Other ◽  
Exchange Rate Risk ◽  
Content Type ◽  
Other Hand ◽  
Rate Risk ◽  
Risk Identify ◽  
Hajj Season ◽  
The Right ◽  
Very High

Purpose The demand for Saudi Arabian real (SAR) is very high in the pilgrimage (hajj) season while the authority, unfortunately, does not hedge the hajj funds. As such, the hajj funds are potentially exposed to exchange rate risk, which can impact the value of hajj funds and generate extra cost to the pilgrims. The purpose of this paper is to conduct simulations of Islamic hedging for pilgrimage funds to: mitigate and minimize exchange rate risk, identify and recommend the ideal time, amount and tenors of Islamic hedging for hajj funds, estimate cost saving by pursuing Islamic hedging and propose technical and general recommendations for the authority. Design/methodology/approach Forward transaction mechanism is adopted to compute Islamic forward between SAR and Rupiah (Indonesian currency) or IDR. Findings – based on simulations, the paper finds that: the longer the Islamic hedging tenors, the better is the result of Islamic hedging, the decreasing of IDR/USD is the right time to hedge the hajj funds and, on the other hand, the IDR/SAR appreciation is not the right time to hedge the hajj funds. Findings Based on simulations, the paper finds that: the longer the Islamic hedging tenors, the better is the result of Islamic hedging, the decreasing of IDR/USD is the right time to hedge the hajj funds and, on the other hand, the IDR/SAR appreciation is not the right time to hedge the hajj funds. Research limitations/implications The research suggests the authority to (and not to) hedge the hajj fund, depending on economic conditions and market indicators. Even though the assessment is for the Indonesian case, other countries maintaining hajj funds might also learn from this paper. Originality/value To the best of author’s knowledge, this is the first paper in Indonesia that attempts to simulate the optimal hedging of hajj funds.

scholarly journals Difference in intensity of exchange rate factors in countries with targeting inflation regime

2021 ◽  
Vol 51 (3) ◽  
pp. 125-143
Author(s):  
A.M. Grebenkina ◽  
◽  
A.A. Khandruev ◽  
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Inflation Targeting ◽  
Emerging Market ◽  
Exchange Rate Volatility ◽  
Developed Countries ◽  
Exchange Rate Policy ◽  
Nominal Exchange Rate ◽  
Vector Autoregressive ◽  
Market Factors

The paper analyzes features of prime factors of nominal exchange rate in countries with inflation targeting regime and high cross-border financial openness. The paper aims to test the hypothesis about different strength of these factors in developed countries and emerging market economies (EMEs). Using a panel vector autoregressive model and panel data for 2010 — 1st half-year 2020 period for 9 developed countries and 10 EMEs, the paper estimates significance of factors from the side of global commodity and financial markets, as well as the side of national monetary policy. The paper finds some evidence of greater sensitivity of EMEs’ nominal exchange rate to global commodity and financial market factors and a greater sensitivity of developed countries’ nominal exchange rate to national monetary policy. The paper regards this result as an argument for EMEs’ exchange rate policy specification, considering the necessity to cope with heightened exchange rate volatility in these countries under the influence of external factors.

Central bank transparency, inflation targeting and monetary policy: a panel data approach

2018 ◽  
Vol 45 (6) ◽  
pp. 1159-1174 ◽  
Author(s):  
Gabriel Caldas Montes ◽  
Cristiane Gea
Keyword(s):  
Developing Countries ◽  
Monetary Policy ◽  
Panel Data ◽  
Interest Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Content Type ◽  
Central Bank Transparency ◽  
Policy Interest

Purpose The evidence concerning the effects of the inflation targeting (IT) regime as well as greater central bank transparency on monetary policy interest rates is not conclusive, and the following questions remain open. What is the effect of adopting IT on both the level and volatility of monetary policy interest rate? Does central bank transparency affect the level of the monetary policy interest rate and its volatility? Are these effects greater in developing countries? The purpose of this paper is to contribute to the literature by answering these questions. Hence, the paper analyzes the effects of IT and central bank transparency on monetary policy. Design/methodology/approach The analysis uses a sample of 48 countries (31 developing) comprising the period between 1998 and 2014. Based on panel data methodology, estimates are made for the full sample, and then for the sample of developing countries. Findings Countries that adopt the IT regime tend to have lower levels of monetary policy interest rates, as well as lower interest rate volatility. The effect of adopting IT on both the level and volatility of the basic interest rate is smaller in developing countries. Besides, countries with more transparent central banks have lower levels of monetary policy interest rates, as well as lower interest rate volatility. In turn, the effect of central bank transparency on both the level and volatility of the basic interest rate is greater in developing countries. Practical implications The study brings important practical implications regarding the influence of both the IT regime and central bank transparency on monetary policy. Originality/value Studies have sought to analyze whether IT and central bank transparency are effective to control inflation. However, few studies analyze the influence of IT and central bank transparency on interest rates. This study differs from the few existing studies since: the analysis is done not only for the effect of transparency on the level of the monetary policy interest rate, but also on its volatility; the central bank transparency index that is used has never been utilized in this sort of analysis; and the study uses panel data methodology, and compares the results between different samples.

Economic complexity and price competitiveness dependence: empirical evidence using panel models

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Guilherme Magacho ◽  
Rafael Ribeiro ◽  
Igor Rocha
Keyword(s):  
Exchange Rate ◽  
Generalized Method Of Moments ◽  
Output Growth ◽  
The Other ◽  
Content Type ◽  
Price Competitiveness ◽  
Economic Complexity ◽  
Other Hand ◽  
The Impact

Purpose As economies with high economic complexity and productive capabilities may easily adapt their productive structure due to product differentiation and innovation, the central variable of competitiveness for these countries is the product quality, not price. On the other hand, the price can be an important determinant of less complex countries, and hence, real exchange rate (RER) misalignments may have long-term impacts. This paper aims to empirically assess variations in the magnitude of the impact in RER misalignments on output growth subject to countries’ economic complexity. Design/methodology/approach The estimation technique used is the generalized method of moments-System estimator as this method is robust to reverse causality. Heterogeneous regressions using interaction models are undertaken to analyze to what extend promoting economic complexity can reduce price competitiveness dependence and allow countries to grow faster without relying on cost competitiveness. Findings Estimates show that economic complexity (which measures technological and productive capabilities) determines cross-country differences regarding the effects of RER misalignments on countries’ long-term growth rates. The results suggest that exchange rate devaluations may not be effective for countries at the top end of the technological ladder while an overvalued RER may damage the long-term growth rate of countries with low levels of economic complexity. Originality/value This paper contributes to the literature by empirically investigating the impact of RER misalignments in countries with distinct technological and productive capabilities based on the recent developments of countries’ economic complexity analysis. It investigates whether more diversified and complex economies are less sensitive to RER misalignments as they can adapt their production, undertake other tasks, create new products and increase the quality of products they produce. Less complex economies, on the other hand, are less capable of innovating because it demands productive capabilities they do not have, and hence, they are more dependent on their current export basket.

Globalization and its Challenges for Teacher Education in Nigeria

2014 ◽  
pp. 229-236
Author(s):  
A. O. K. Noah ◽  
Adesoji A. Oni ◽  
Simeon A. Dosunmu
Keyword(s):  
Teacher Education ◽  
Educational System ◽  
Developed Countries ◽  
Global Market ◽  
The Other ◽  
Other Hand ◽  
Catch Up ◽  
The Developed Countries

The phenomenon of globalization is defined variously, but in general, it is defined as the establishment of a global market for goods and capital, leading to what could be described as a multiplicity of linkages and interconnections between places, events, ideas, issues, and things, irrespective of whether they are directly related or not. Globalization on the other hand cannot be a reality in any nation if its educational system is not implicitly or explicitly geared towards achieving meaningful and desirable change for that society. However, since education and indeed the (educator) teacher constitute the most viable instruments by which an emerging nation can catch up with the developed countries, globalization will therefore be a mirage if teacher education is not geared towards producing teachers who are globalization friendly, teachers who are not allergic to globalization. In view of the above, this chapter examines the concept of globalization side by side with the current goals of teacher education in Nigeria.

Determinants of Industrial Development

2021 ◽  
pp. 378-406
Author(s):  
Fiona Tregenna ◽  
Kevin Nell ◽  
Chris Callaghan
Keyword(s):  
Developing Countries ◽  
Human Capital ◽  
Exchange Rate ◽  
Panel Data ◽  
Industrial Development ◽  
Trade Openness ◽  
Developed Countries ◽  
Government Consumption ◽  
Capital Account Liberalization ◽  
Exchange Rate Depreciation

Global evidence suggests that, for many countries, manufacturing typically has an inverted U-shaped relationship with development. But unlike the historical experience of most developed countries, for most developing countries the turning point of this relationship is occurring sooner in the development process, and at substantially lower levels of income. This is termed ‘premature deindustrialization’. The consequences of this may be particularly important if such countries can no longer rely on manufacturing-led development. Why are some countries more industrialized, or more deindustrialized, than other comparable countries? To explore these issues, this chapter uses panel-data econometric techniques to analyse the determinants of the share of manufacturing in GDP, across countries and across time. Domestic determinants include investment, government consumption, population size, human capital, democracy, and natural resource endowments. External determinants include trade openness, capital account liberalization, and exchange rate depreciation.

Sign in / Sign up

Export Citation Format

Share Document