A revival of money velocity would pressure the US Fed

Significance The debate about how transitory this inflation is will persist. One way to consider the phenomenon is to examine the velocity of money -- the ratio of nominal GDP to monetary aggregate M1 or M2 -- which measures how many times money is changing hands, reflecting the willingness of consumers and businesses to engage in economic transactions. Money velocity remains modest but, if it rises, inflation pressures will also rise. Impacts The extent to which pandemic-related behavioural changes persist will shape the longer-term economic outlook and change many sectors. The Fed's communication policy will be key to calming markets; research shows that it has successfully anchored inflation expectations. Two years after COVID-19 was first known to be circulating, its spread remains the largest influence on the economic outlook.

O “legado” monetarismo de milton Friedman Milton friedman’s “legacy”

O presente estudo se propõe a discutir o legado teórico deixado por um dos maiores economistas do século XX, Milton Friedman, autor esse que revolucionou a teoria econômica ao questionar as proposições keynesianas e propor a moeda como a variável relevante a ser analisada e prescrições políticas que assegurassem a estabilidade econômica por meio de regras sobre esse agregado monetário. O roteiro da avaliação empreendida nesse trabalho foi, primeiramente, uma avaliação empírica da experiência monetarista implementada nos governos Margaret Thatcher (Inglaterra) e Paul Volcker (EUA) e, na sequência, uma discussão teórica sobre o que foi absorvido ou não pelas teorias econômicas que sucederam o monetarismo de Friedman. Com base nessas discussões, o estudo sustenta que a “herança” deixada pelo autor foi pequena quando comparada ao que não foi absorvido pelas demais teorias e a principal razão para esse fato repousa na baixa aderência verificada pela teoria de Friedman e os resultados empíricos observados durante sua experiência nos EUA e na Inglaterra. This study aims to discuss the theoretical legacy left by one of the greatest economists of the 20th century, Milton Friedman, who revolutionized economic theory by questioning Keynesian propositions and proposing money as the relevant variable to be analyzed and political prescriptions that ensure economic stability through rules on this monetary aggregate. The evaluation tour undertaken in this work was, firstly, an empirical evaluation of the monetarist experience implemented in the Margaret Thatcher (England) and Paul Volcker (USA) governments, and then a theoretical discussion on what was or was not absorbed by the economic theories that succeeded Friedman's monetarism. Based on these discussions, the study argues that the legacy left by the author was small when compared to what was not absorbed by other theories and the main reason for this fact lies in the low adherence verified by Friedman's theory and the empirical results observed during his experiment. in the USA and England.

Validity of Taylor's rule for Turkey: An empirical study

The aim of this paper is to propose an estimate of the reaction function of Turkey's monetary policy for the periods from January 2005 to January 2020. In this perspective, a VAR (Vector Autoregressive) model is set up. The VAR model was estimated using Stata software. In this study, the Taylor rule is extended by implicating the industrial production index and the monetary aggregate M2 into policy reaction function. By doing so, the Taylor rule is investigated for the Turkish economy, and the validity of the rule is tested. The results of the ADF test show for all the observed variables that the null hypothesis of a unit root is rejected. In other words, the condition of stationarity seems to be satisfied. In the short term, it seems that a change in the behavior of the variable M2 has an impact of 1% on the level of the current inflation rate as well as the current real interest rate. For the period studied, the results of the VAR modeling indicate that Taylor's rule is partly true for the short term but that it is not for the long term. The choice of the period studied seems to be the main reason for the non-cointegration between the inflation rate and the bank rediscount rate.

Effectiveness of Monetary Policy Transmission Mechanism in an Implicit Inflation Targeting Regime: The Case of Nigeria.

The study examines the effectiveness of the monetary policy transmission mechanism in Nigeria by estimating a sticky-price DSGE model using the Bayesian estimation approach. This study is important given the implicit inflation targeting framework employed in the implementation of monetary policy in the country. The study employs quarterly data from 2000:1 to 2019:4 to estimate the two main categories of monetary policy frameworks, monetary aggregate and implicit inflation targeting, respectively. Data are sourced from World Development Indicator (online version). Empirical results show that the monetary policy transmission channels are effective in transmitting policy impulses to the economy within this regime. However, the monetary aggregate framework that is made explicit dampens the achievement of this framework. The study, therefore, concludes that inflation targeting should be made explicit in the country in other to reap the benefits embedded in the framework.

THEORETICAL SUBSTANTIATION OF THE DEFINITION OF CRYPTOCURRENCY AS MONEY

Purpose. The aim of the article is elaboration of theoretical and practical aspects of definition and functioning of cryptocurrencies as money. Methodology of research. The following methods were used in the study: statistical analysis and comparison – in the study of problematic aspects of the definition of cryptocurrency as a kind of money; logical assessment – in substantiating the principles of determining cryptocurrency as a kind of money; generalization – in the process of formulating conclusions based on the results of the analysis. Findings. It is established that money is a financial asset with high liquidity, which can be quickly converted into paper money or coins, serve as an intermediary in money circulation (i.e. play the role of equivalent in exchange) and can be used for savings and therefore anything that can function as money, are money (including cryptocurrency coins). It is substantiated that cryptocurrency coins, as a type of money, perform the following functions: there is a potential to perform the function of a measure of value after reducing the significant volatility of the value of cryptocurrencies; partly as a medium of exchange due to high volatility, regulatory resistance and low prevalence, but prevalence will increase as traditional payment systems begin to integrate cryptocurrencies, cryptocurrencies have high convenience and inclusiveness, have the potential to reduce transaction costs, increase settlement speeds, develop cryptocurrency markets and increasing their prevalence; due to opposition from ESG investors and regulators, low confidence from a significant number of citizens (especially over the age of forty) and a significant speculative component of cryptocurrency coins, only partially serve as a means of accumulation, however, the demand for cryptocurrencies from investors is constantly growing. Originality. The definition of cryptocurrency (cryptocurrency coin, cryptocoin) as a new digital type of money, which can measure the value of goods, services and other currencies, used for circulation, savings and investment, protected by cryptographic code with the inability to counterfeit or copy, and issue which everyone has the opportunity with the Internet and the necessary equipment with complete anonymity of the issuer (miner). Practical value. The main results of the conducted study will create favourable conditions for a better understanding of cryptocurrency as a new type of money, which will allow them to be more widely used in the economic activities of businesses and countries. Key words: money, cryptocurrency, cryptocoin, cryptocurrency coin, mining, cryptocurrency functions, Ethereum, Monero, monetary aggregate.

Serbia's foreign exchange reserve adequacy and the factors influencing their accumulation

In this paper, the adequacy of foreign exchange reserves in Serbia and the factors that influence their accumulation is analyzed by means of an econometric model. The relevant variables, such as the gross domestic product (GDP), the real effective exchange rate (REER) and monetary aggregate M2/GDP are included in the analysis. The unit root tests applied in the research led to the conclusion that the timeseries were integrated of the order I(1). The cointegration test revealed that there was one cointegration equation. The regression model was estimated using the quarterly data for the period from 2002q1 to 2020q3. The estimated cointegration coefficients showed that the economic activity approximated in terms of the gross domestic product (GDP) had a significant influence on foreign exchange reserves accumulation, which is only followed by appreciation pressure on the dinar (approximated by the REER index) and money supply growth (estimated through the monetary aggregate M2/GDP). In addition to conventional factors, the analysis also points out specific factors and their impact on foreign exchange reserve accumulation in Serbia. The results of the research study show that foreign exchange reserves in Serbia are greater than the levels suggested by standard optimality criteria. The findings also suggest that it is necessary to take into account the dividends realized by foreign investors, as well as some segments of portfolio investment in assessing the specific indicator of the adequate level of foreign exchange reserves.

THE PROSPECTS OF INCREASING OF BANK’S RESOURCES POTENTIAL AT THE EXPENSE OF ACTIVATION OF INVOLVING HOUSEHOLD SAVINGS

At present, the economy of Ukraine needs to attract significant financial resources and the Ukrainian financial system has them, but in a frozen state. This is the household savings in the cash form. The problem is to convert unorganized household savings into bank resources, which will meet the needs of economic entities in borrowed funds and at the same time allow citizens to receive additional income, which will lead to increased consumer demand. The purpose of this article is the development of theoretical and methodological principles and practical proposals for the transformation of household savings into banking resources. However, it is necessary to identify the factors of the formation of household savings, the main of which is undoubtedly the level of income. Certainly, the income of the population plays a significant role in the development of the whole country. And it is the level of economic development of the country that determines the motivation of households in the creation of savings. In addition, the amount of savings is also influenced by other factors, such as the level of income taxation, deposit and credit interest rates, the age structure of the population, etc. The article has analyzed the dynamics of incomes and savings of the population from 2005 to 2019, as well as the monetary aggregate M0 as a potential resource of commercial banks. It was determined that the amount of monetary aggregate M0 in 2005 amounted to UAH 60.2 billion, and by the end of 2019, this figure exceeded the mark of UAH 384.4 billion. The monetary aggregate M0 includes cash in circulation outside deposit-taking corporations, which includes funds of the population, which under certain conditions may become a banking resource. At the same time, the ratio of the monetary aggregate M0 and M3 in Ukraine during 2005-2019 remains consistently high - at 27%. Interestingly, that only about 50% of the population's savings become resources of banks. While businesses are looking for affordable sources of financing their investments, much of the savings are accumulated in the form of national and foreign currency. This is due to the low attractiveness of alternative investment options for the population (in private pension funds, life insurance, mutual investment institutions, real estate, etc.) bank deposits will remain the main means of investment soon. However, the formation of the resource potential of banks based on household savings should be based on a combination of tools at all levels of the hierarchy, such as the influence of the NBU, the banking sector, and individual banks.

The BSP’s journey towards a progressive monetary policy framework

This paper examines the evolution of monetary policy framework in the country. It starts the journey with the establishment of the central bank after the Second World War, when there was still no active monetary policy as the country operated on a fixed exchange rate system and supply-led credit programs. The paper describes the challenges with the implementation of monetary policy reforms in the 1980s, particularly the shift to a “managed float” exchange rate system and the adoption of monetary aggregate targeting framework in the context of deregulation and liberalization. It further discusses the development of monetary policy framework and operations, following the creation of an independent Bangko Sentral ng Pilipinas (BSP) in 1993, with the primary mandate of maintaining price stability. It provides a narrative on how the monetary aggregate targeting framework was modified to its eventual shift to an inflation targeting (IT) framework. It highlights the relative success of IT and discusses the innovative approaches undertaken by the BSP to further enhance liquidity management. Moving forward, the BSP’s monetary policy framework and operations will likely continue evolving and serving as steady anchors of macroeconomic stabilization. This will be guided by foresight, commitment to action and helpful lessons from the past, in the context of increased uncertainty.

Forecasting the Amount of Cash in Circulation Based on a Regression Model with Lagged Variables

Despite the rather positive dynamics in developing the non-cash payment infrastructure, cash in Russia has been and remains the widespread instrument of payment. The purpose of this paper is the development of a model for forecasting the amount of cash in circulation in the country, namely the value of the monetary aggregate M0, by the example of the Russian Federation. At the same time, the objectives were set so that the resulting model should be suitable for a sufficiently accurate rapid estimation of М0 value, should be easy to use, and should not be overloaded with many variables. The author succeeded in achieving these purposes in the research using a formal approach based on a model with lagged variables, autoregression and time series analysis, also using numerical methods. The lagged variables used were the inflation rate and the value of the monetary aggregate for a previous period. The high quality, accuracy and forecasting power of the model are substantiated. The average approximation error of the model did not exceed 5%.Testing of the model using statistical data of the current year showed high accuracy of forecasting. Statistical data of official sources of the Russian Federation were used for the model development