Elections may end attempts at orthodoxy in Argentina

Significance Lower spending and a contraction in the monetary base have helped reduce the gap between the official and informal exchange rates and devaluation expectations. The government also came to an understanding with the Paris Club to extend debt-restructuring talks, thus averting a new default. Impacts A poor electoral result for the government could see a shift to more expansionary policies thereafter. Fiscal and monetary discipline, unusual in an election year, reflects the Peronist party’s ability to control unions and social movements. In 2022 the government will focus on restructuring debt with the Paris Club and the IMF, but prospects for structural reforms are poor.

Money stock determination process and money multiplier: case of South Korea

Purpose This study aims to re-examine the money stock determination process for South Korea under the assumption of the existence of potential asymmetric (non-linear) relations (a mechanism) between the money stock and the monetary base. Because, the true and detailed diagnosis of this mechanism is crucially important for the Bank of Korea’s (BOK)’ monetary policy, as this country has been adopting an inflation targeting policy (ITP) for a long-time. Design/methodology/approach This paper applies the non-linear autoregressive distributed lag model by Shin et al. (2014). This model separates the original series of the monetary base into their increases (+) and decreases (−). The increases (+) and decreases (−) done by the BOK correspond to expansionary and contractionary monetary policies, respectively, in this study. Findings The empirical findings are two-fold. First, the money stock determination process in Korea has a non-linear (asymmetric) structure. This means that increases (+) and decreases (−) in the monetary base have asymmetric (different) impacts on money stock. Second, the BOK’s only expansionary monetary policy exhibits exogenous nature money stock determination with an almost stable money multiplier. These findings may help the BOK to take preventive precautions in its monetary policy implementations. Originality/value This study with its methodology may help the BOK to take preventive measures in its ongoing ITP proactively.

External Dependence of the African Franc CFA zone. Empirical Investigations on Money Supply Process

The objective of this paper is to study the operating mechanisms of the issuing institutions in CFA area and the different sources of money creation. Our approach consists in studying, respectively the automatic or discretionary nature of monetary policies, through the establishment of non-neutralization/non-sterilization monetary indices (index); and in a second step we test, using co-integration models, the evolution of monetary base in relation of Net External Asset (NFA) and in relation to the evolution of Net Domestic Assets. Our results mainly indicate the existence of a preponderance of the external sector or NFA over the evolution of the monetary base or money supply, compared to the domestic sector. In addition, we observe an automatic adjustment in both WAEMU and CEMAC over the long term. But the return to equilibrium is slower in WAEMU due to a mix of automation and discretion. On the other hand, in CEMAC, the return to equilibrium is almost automatic with a strong dependence on the external sector.

Monetary Base Controllability after an Exit from Quantitative Easing

This study examines the problem that a central bank may face after exiting a monetary quantitative easing policy. It develops a simple dynamic optimization model of a central bank, which finds that if the bank needs to absorb a substantial amount of excess reserves when exiting, the monetary base may become uncontrollable. In this case, the bank has no option but to increase the monetary base by more than the target amount, which leads to an undesirable money supply expansion and, ultimately, to inflation pressures. The model shows the condition when a central bank faces such a challenging situation.

Does Monetary Policy Boost Economic Growth? The Case of Small Open Economy

The main aim of this paper is to investigate the impact of monetary policy tools on economic growth in Azerbaijan during 2005-2018 using the Vector Error Correction Model (VECM). Also, different co-integration methods, namely, Johansen, DOLS, FMOLS and CCR were utilized for the robustness test. The outcomes of the different co-integration methods are consistent with one another and confirm the existence of long-run relationships among variables. Furthermore, the estimation results of VECM show that the monetary base and exchange rate have a positive and statistically significant impact on economic growth in the long-run, while the discount rate is insignificant. The paper concludes that the monetary base and exchange rate should be promoted by policymakers over other monetary policy tools during monetary policy implementation toward stimulating economic growth.

Taylor and McCallum Rule during the Unprecedented Monetary Easing Era: The Recent Japanese Case

The Taylor and McCallum rules have been examined a lot in many studies. After these frameworks were presented, deflation has been prevailing and market interest rates have been low, almost zero, or negative in the world. Japan is a typical example. Unconventional monetary policy based on monetary base instead of based on interest rates, has been conducting. This study examines whether or not the Taylor and McCallum rule fit well in Japan. The empirical results show that the McCallum rule fits for recent Japanese cases, but the Taylor rule does not.

Testing the stability of money multupliers for Croatia

This paper analyses the stability of monetary multiplication process in Croatia and its forecasting ability. The money multiplier approach assumes that the monetary authorities are able to control the monetary base through money multipliers by affecting the money supply and the rate of inflation. Thus, by controlling the monetary base, monetary authorities can achieve price stability. For implementing an effective and accurate monetary policy, money multipliers should be stable. The stability of money multipliers implies that different measures of money supply (i.e. different monetary aggregates) and reserve money are stationary or that different measures of money supply and reserve money are cointegrated. Therefore, the purpose of this paper is to test for the stationarity of money multipliers and to determine the long-run relationship between different monetary aggregates and reserve money for Croatia using monthly data in the period from 2011 to 2019 and the bounds testing (ARDL) approach for cointegration. The results of the unit-root tests indicate that money multipliers are nonstationary, therefore unstable and inappropriate for the short-run policy purpose. On the other side, the existence of stable cointegration relationships suggests the validity of the money multiplier model in the long-run