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1.
Webology ; 19(1):2341-2356, 2022.
Article in English | ProQuest Central | ID: covidwho-1964722

ABSTRACT

Monetary coordination and macroeconomic stability are increasingly critical for domestic and fiscal policy in the aftermath of the global financial crisis. This research investigates the impact of monetary policy on financial and economic stability following the COVID-19 pandemic's economic lockdown. This article utilized a V.A.R. (Vector Autoregressive Models) estimator for time series data models. Quarterly statistics are gathered from the first quarter of 2004 to the first quarter of 2018. Using a V.A.R. model, the study investigates the causal connections between monetary policy instruments and economic stability. The findings suggest that Iraq's monetary policy is most efficient at maintaining a target growth rate for the money supply while simultaneously controlling inflation through an equalization cap (1.8 percent). Due to the rentier structure of the Iraqi economy, the money supply had a negligible influence. Monetary authorities must monetize oil earnings in order to finance public spending. Finally, an appropriate framework for monetary management must be created that ensures monetary independence and supremacy remain unimpaired. The findings give a thorough knowledge of the links between national monetary policies and economic stability, which can eventually aid in developing nations' formulation of good monetary and fiscal policies.

2.
Journal of Economic Surveys ; 2022.
Article in English | Scopus | ID: covidwho-1961651

ABSTRACT

In response to the Covid-19 crisis, the European Central Bank (ECB) has relaunched a massive asset purchase programme within its combined-arms monetary strategy. This paper surveys and discusses the theory and the evidence of the central bank's unconventional monetary tools for the euro area. It analyses the role of the asset purchase programmes in the ECB's toolkit and the associated risks, focusing specifically on the gradual unwinding of these unconventional initiatives. Finally, the paper offers some insight into the possible evolution of the ECB's monetary policy. © 2022 The Authors. Journal of Economic Surveys published by John Wiley & Sons Ltd.

3.
Webology ; 19(2):9350-9362, 2022.
Article in English | ProQuest Central | ID: covidwho-1957813

ABSTRACT

Role of money demand occupies a central place in regulating the monetary management of the economy and a topic of keen interest among researchers and academics (Sichei & Kamau, 2012). Growing money demand ensures an upsurge in the economic activity and vice versa. The present study analyzes the money demand function in Pakistan. The ARDL method to co-integration is used on data ranged between 1972 and 2018. The results showed that statistically significant effects of all main hypothesized factors including number of bank branches, population growth rate and agricultural output are found positive, negative and negative, respectively, both in the short-run and long- run. Whereas the effect of traditional factors viz., income and inflation rate on money demand appeared as positive, and statistically significant. The broad money demand function appeared to be stable in Pakistan. Policy to be focused on certain factors is discussed.

4.
Economic Papers: A journal of applied economics and policy ; n/a(n/a), 2022.
Article in English | Wiley | ID: covidwho-1956673

ABSTRACT

During the post-COVID period, demand augmenting policies were needed and have been exercised by the Government of India to prevent the Indian economy from falling into recession. However, these demand augmenting policies seem to be inflationary as in the recent past high inflation has been observed in India. Thus, optimum combination of monetary and fiscal policies is needed to simultaneously achieve the objectives of demand growth and price stability. This paper proposes combinations of the two policies based on the results of a sign-restricted vector autoregressive (VAR) modelling framework. The experimentation was performed using sign restrictions on macroeconomic target variables viz. demand growth and inflation rate while leaving the policy variables free to suggest proposed stances to achieve desired objectives. On the basis of the empirical findings, the proposed stances of monetary and fiscal authorities were then compared with the actual stances and requisite correction in the policy behaviours has been suggested in terms of improvements to the magnitude and frequency of contraction and expansion.

5.
Social Sciences in China ; 43(2):102-124, 2022.
Article in English | ProQuest Central | ID: covidwho-1947818

ABSTRACT

The COVID-19 pandemic, the regulation of real estate, and external uncertainties are the core variables in the recent evolution of China’s financial risks, and overall planning and structural deployment are the key guarantees for China’s financial stability. From an aggregate perspective, China’s systemic financial risk tended to ease overall in 2021, but remained high. The risk profile of China’s financial system in 2021 presented five important features. First, the macro leverage ratio fell slightly, but exposed the hidden dangers of balance sheet recession. Second, there was a certain blockage in the transmission of financial system liquidity to the real economy. Third, the fragility of the financial system was further exposed, the bond default balance reached a new high, the structural differentiation of bonds between state-owned and private enterprises became prominent, and private enterprise default became more serious. Fourth, the contagion effect of domestic cross-market financial risks remained significant. Fifth, the international political and economic situation was volatile, and spillover effects such as the rising prices of raw materials, the inauguration of a new US administration, and the shift of the Federal Reserve’s monetary policy were significantly strengthened. In terms of key risk areas, the risks of the real estate market, hidden government debt, and small- and medium-sized domestic banks were quite prominent. in 2022, pandemic prevention and control, economic recovery, and structural upgrading will remain the main themes of China’s development. China’s financial risks are generally under control, but the country will still face major risks such as a high macro leverage ratio, tight market liquidity, increasing debt vulnerability, significant spillover effects, and rising volatility in the international market.

6.
Energies ; 15(13):4710, 2022.
Article in English | ProQuest Central | ID: covidwho-1934006

ABSTRACT

Energy and climate policies play an increasingly important role in the world in the era of climate change and rising energy prices. More often, the importance of the development of the energy sector and climate protection is seen from the point of view of the expenditures that will need to be absorbed in the economy, with the potential for increased energy prices. However, it should be remembered that this is also related to the issue of fuel poverty and the inability to meet basic energy needs by parts of society. The aim of the paper is to assess the importance of macroeconomic policy instruments in reducing fuel poverty, using Poland as an example. It will be examined whether and how the government influenced this phenomenon (directly or indirectly), through which instruments, and which instruments (fiscal, monetary or energy-climate policy) played the most important role in shaping the scale of fuel poverty in Poland, with an emphasis on the role of monetary and fiscal policy instruments. The analysis covered the period from 2004 to mid-2021. The results of the research showed that in Poland there is a lack of policy directly aimed at reducing fuel poverty, and the government affects the scale of fuel poverty indirectly mainly through macroeconomic policy instruments, i.e., fiscal and monetary policy instruments. The main and most effective instruments for reducing fuel poverty in Poland are social transfers. Other instruments that have a statistically significant impact on this poverty rate are the level of tax burdens and short-term interest rates. The analysis also revealed some opportunities for effective fuel poverty reduction policies. It was proven that in addition to fiscal policy, monetary policy, which would stimulate a decrease in short-term interest rates, is also an effective way to reduce the fuel poverty rate in Poland.

7.
Review of Economic Analysis ; 14(2), 2022.
Article in English | Scopus | ID: covidwho-1929508

ABSTRACT

In Canada, COVID-19 pandemic triggered exceptional monetary policy interventions by the central bank, which in March 2020 made multiple unscheduled cuts to its target rate. In this paper we assess the extent to which Bank of Canada interventions affected the determinants of the yield curve. In particular, we apply Functional Principal Component Analysis to the term structure of interest rates. We find that, during the pandemic, the long-run dependence of level and slope components of the yield curve is unchanged with respect to previous months, although the shape of the mean yield curve completely changed after target rate cuts. Bank of Canada was effective in low-ering the whole yield curve and correcting the inverted hump of previous months, but it was not able to reduce the exposure to already existing long-run risks. © 2022, International Centre for Economic Analysis. All rights reserved.

8.
Pacific-Basin Finance Journal ; : 101815, 2022.
Article in English | ScienceDirect | ID: covidwho-1926818

ABSTRACT

The Australian government and Reserve Bank of Australia responded to challenges posed by the COVID-19 pandemic with a number of rapid interventions within a short period of time in early to mid-2020. We examine the impact of news relating to COVID-19, monetary policy interventions, containment measures, and the unwinding of restrictions on Australian bank and FinTech stock prices. The global pandemic was caused by factors outside the banking sector and capital markets, therefore, the policy responses from this unique crisis provides us with new knowledge. Bank and FinTech stock prices were more sensitive to the government's macroeconomic announcements and the unwinding of containment measures than to monetary policy interventions in this unique environment. The response of banks and FinTechs to COVID-19 related macroeconomic decisions is consistent with the response of bank stock prices in previous financial crises. This finding suggests a stronger emphasis on macroeconomic announcements is required as a stabilizing policy tool when managing future crises from outside the banking and capital market sectors.

9.
Politica Economica ; 37(3):313-338, 2021.
Article in English | Web of Science | ID: covidwho-1925185

ABSTRACT

The COVID-19 crisis has compounded the uncertainty that has come to characterise the European economy. We explore how this uncertainty manifests itself in terms of European Central Bank decision-making and the long-run challenges the ECB faces. Confidence in ECB actions will come from the contingency scenarios it considers and communicates on, and from the adoption of potential policies for a wide range of such scenarios. Greater clarity around the ECB's inflation target and surrounding tolerance bands would also be beneficial.

10.
Politica Economica ; 37(3):289-312, 2021.
Article in English | Web of Science | ID: covidwho-1925136

ABSTRACT

We review the ECB measures since the start of the COVID-19 crisis, i.e. the extension of APP and the introduction of PEPP. We show that APP announcements have helped steer inflation expectations upward. We also show that PEPP has alleviated fragmentation risk. Finally, we show that since the mid-2000s, ECB measures have had real effects on euro area unemployment rates, nominal effects on inflation rates and financial effects on banking stability.

11.
VUZF Review ; 7(2):17-24, 2022.
Article in Bulgarian | ProQuest Central | ID: covidwho-1925019

ABSTRACT

The article describes the measures taken by the central banks of the world's largest economies to combat high inflation. The authors give a definition of what exactly is considered high inflation, analyze the timeliness and effectiveness of taking anti-inflationary measures, and also answer the question of the need for the monetary authorities to react to inflation, which does not have an obvious monetary nature. In the article the particular attention is paid to the difference between the anti-inflationary policy of central banks in developed and emerging markets, as well as to the issues of coordination between the actions of the central bank and the government in the field of anti-inflationary policy. The authors point out the importance of increasing the efficiency of the transmission mechanism through the development of various segments of the financial market, including the derivatives market. As a result of the study, a hypothesis is put forward that there is a direct relationship between the development of the financial market, especially the capital market, and the costs of fighting inflation. Countries with less developed capital markets and smaller gold and foreign exchange reserves are forced to use the key rate of central banks to fight inflation, paying with their economic growth potential for the opportunity to have low inflation. The article also makes a fundamental conclusion that the risk of inflation has acquired global features, however has not yet affected all countries, bypassing those markets that traditionally struggled with the deflation factor, and their central banks had negative rates. As well, the article pays attention to the dependence of the foreign exchange rate on the difference between the levels of interest rates, and makes assumptions about the possibility of manipulating the foreign exchange rate through delaying anti-inflationary measures in order to stimulate exports.

12.
Atl Econ J ; 50(1-2): 67-84, 2022.
Article in English | MEDLINE | ID: covidwho-1914004

ABSTRACT

This paper investigates the spillover effects of United States monetary policy on exchange rates of 11 emerging markets and 12 advanced economies during the pre-Coronavirus Disease 2019 (COVID-19) period of 2019 versus the COVID-19 period of 2020. The investigation was achieved via a structural vector autoregression model, where year-on-year changes in weekly measures of economic activity, exchange rates and policy rates were used. The empirical results suggest evidence for the spillover effects of United States monetary policy for several countries during the pre-COVID-19 period, whereas they have been effective only for certain countries during the COVID-19 period that can be explained by the disease outbreak channel. It is implied that policies keeping the pandemic under control may help mitigate the unforeseen economic effects of the COVID-19 crisis. Supplementary Information: The online version contains supplementary material available at 10.1007/s11293-022-09747-4.

13.
J Econ Dyn Control ; : 104460, 2022 Jun 26.
Article in English | MEDLINE | ID: covidwho-1907279

ABSTRACT

This paper explores the robustness of laboratory expectation formation and public signal credibility to external uncertainty shocks and online experimentation. We exploit the recent pandemic as a source of exogenous background uncertainty in a New Keynesian learning-to-forecast experiment (LtFE) where participants receive projections of varying precision about future inflation. We compare results from identical LtFE completed immediately before the onset of the pandemic, soon after (online), and well after (online and in-person). Baseline LtFEs with no communication are robust to both factors. However, both background uncertainty and online experimentation impact how subjects use public signals. The pandemic led to a decreased appetite for and tolerance of overly precise communication while increasing the efficacy of projections that also convey uncertainty. Subjects became more averse to central bank forecast errors after the onset of the pandemic if the central bank conveyed a precise outlook but not if it conveyed forecast uncertainty.

14.
IUP Journal of Applied Finance ; 28(2):5-23, 2022.
Article in English | ProQuest Central | ID: covidwho-1905127

ABSTRACT

Many research studies related to the impact of monetary policy and macroeconomic variables have already been conducted, but studies on combining this with global factors and its shocks are very few. To fill this research gap, the paper tries to find out the combined effect of global factors, macroeconomic variables, and monetary policy on 10-year Indian government bond yield using Structural Vector Autoregression (SVAR) and Autoregressive Distributive Lag (ARDL) model. This paper is designed to analyze the impact of various variables on 10-year Indian government bond yield, in the context of its continuous exposure to global factors like oil price shocks and changes in macroeconomic variables. The empirical findings, based on monthly data relating to the period January 2001 to April 2021, suggest that monetary policy has had a considerable impact on bond yields over a long-term horizon, which appears to be consistent with the prevailing Keynes theory. However, the output has the least impact on bond yield. This may be because the monthly data that is used in the study restricts to use GDP. Hence the Index of Industrial Production (IIP) data is used. Further, inflation shocks increase bond yields and global factors like oil price shocks have detrimental effects on bond yields for a long-time horizon of 24-36 months, whereas an increase in the 10-year US government bond yield results in an increase in 10-year Indian government bond yield.

15.
Front Public Health ; 10: 865603, 2022.
Article in English | MEDLINE | ID: covidwho-1903215

ABSTRACT

The outbreak of COVID-19 in 2019 has caused a huge impact on the global economy. In this context, it is of great significance to study the orientation and regulation of China's monetary policy, which aims to mitigate the external impact brought by COVID-19. Therefore, this paper uses the SV-TVP-FAVAR model to analyze the dynamic relationships among interest rate, inflation gap and output gap. The main conclusions are as follows. First, the output gap has a significant impact on the adjustment of the interest rate and inflation gap. In the COVID-19 era, the former response is positive and the latter response is negative. Second, the impact of the inflation gap on the interest rate fluctuates frequently, but the impact has gradually weakened in recent years. In addition, the inflation gap shows a significant positive response to the impact of the output gap. Third, interest rate is characterized by targeting the output gap and the inflation gap in the short term. However, in the period of COVID-19, the regulation effect of China's monetary policy on the inflation gap and the output gap has weakened. Meanwhile, compared with targeting the output gap, monetary policy has a more obvious orientation to control inflation.


Subject(s)
COVID-19 , COVID-19/epidemiology , China/epidemiology , Humans , Policy
16.
European Journal of Interdisciplinary Studies ; 14(1):68-86, 2022.
Article in English | ProQuest Central | ID: covidwho-1904124

ABSTRACT

Within the broader context of new dimensions of poverty such as housing poverty, energy poverty, etc., this article describes dependencies between household income, real estate ownership and socio-economic trends. We argue that income is not the principal determinant for home ownership rate, but rather recent lifestyle changes can better explain the homeownership decreasing trend in developed economies. Job mobility, family formation determinants and demographical trends seem to find well-supported basis in literature and data. Using data for the US states we have proved that the decreasing rate of home ownership may be explained by social aspects of changing lifestyle such as increasing share of population moving from rural areas to cities, age of marriage, divorce rate, career-oriented lifestyle, rather than by the frequently cited price-income ratio. We have also observed a short-term correlation between financing availability and homeownership rate, but we conclude that property prices would adjust to lose monetary policy without any long-term effect on homeownership rate. It results that government or monetary policies aimed to cushion the housing unavailability (recently increasing value of price-income) ratio may distort the housing market. We propose a new insight in the housing availability discussion.

17.
Sustainability ; 14(11):6896, 2022.
Article in English | ProQuest Central | ID: covidwho-1892988

ABSTRACT

Income inequality in China has become increasingly serious since the beginning of the economic reform period in the 1970s, with urban–rural income inequality playing a large role. Urbanization policy and monetary policy are currently important economic policy tools for the Chinese government. In order to investigate the influence of inequality on the economy and to provide recommendations for ensuring the sustainability of growth, we study the effect of urban–rural income inequality on economic growth in the context of urbanization and monetary policy in China between 2002 and 2021. Using a flexible time-varying parametric structural vector auto-regression (TVP-VAR) model and a robust Markov chain Monte Carlo (MCMC) algorithm, our empirical results show that the effect is time-varying, with inequality promoting growth in the early years but affecting it adversely at later stages. Currently, urbanization mitigates inequality and promotes growth simultaneously, while easy monetary policy worsens inequality and affects growth adversely in the long term. We suggest that the authorities need to consider the implementation of policy rebalancing to ensure that the sustainability of economic development is not jeopardized because of worsening income disparity. Proactive urbanization policy and prudent monetary policy are viable rebalancing options.

18.
The North American Journal of Economics and Finance ; 62:101719, 2022.
Article in English | ScienceDirect | ID: covidwho-1886004

ABSTRACT

Real interest rates have fallen dramatically since the early 1980s. Economic theory states that lower real rates discourage savings while promoting spending. However, today, in the world economy, we face a global saving glut problem in which, even in negative real rates, economic agents keep saving. This situation leads to excess demand for safe assets (US Treasuries), lower bond yields, and higher equity valuations. Thus, the world economy has become more dependent on major economies, especially the United States. In this research, we aim to measure the dependency of the world economy on United States monetary policy. We called this new methodology “financial gravity” and tried to quantify the nature by using panel data analysis. We define monetary dependency (financial gravity) by US Investment flows and their reaction against International Reserves, Credit Default Spreads (CDS), and Foreign Exchange Rates. Our empirical findings support that financial gravity is positively related to international reserves and negatively related to Credit Default Swap Spreads (CDS) and Foreign Exchange rates. We also analyzed the COVID-19 period and found that pandemics positively contributed to world reserve accumulation due to economic lock-down measures, fiscal stimulus packages (unemployment benefits), and decreased global spending.

19.
SSRN; 2022.
Preprint in English | SSRN | ID: ppcovidwho-338558

ABSTRACT

This paper reviews the literature that addresses the stock pricing implications of COVID-19 outbreak. Stock prices dropped substantially in March 2020 as a reaction to the onset of the COVID-19 pandemic;however, they recovered quickly from April/May 2020. Markets only incorporated the pandemic risk from late February 2020. During the crisis period, both the discount rate and expectation of growth were the most important (but not the only) reasons for the movement of stock prices. The Fed interventions also helped markets to recover one-third of their lost returns during COVID-19. Finally, investors’ preferences and capital shifted to more ESG-friendly firms both during and after the crisis, implying that ESG firms performed well during the time of COVID-19.

20.
European Economic Review ; : 104168, 2022.
Article in English | ScienceDirect | ID: covidwho-1881998

ABSTRACT

We embed an extension of the canonical epidemiology model in a New Keynesian model and analyze the role of monetary policy as a virus spreads and triggers a sizable recession. In our framework, consumption is less sensitive to real interest changes in a pandemic than in normal times because individuals have to balance the benefits of taking advantage of intertemporal substitution opportunities with the risk of becoming sick. Accommodative monetary policies such as forward guidance result in large increases in inflation but have only limited effects on real economic activity as long as the risk of infection is large. The optimal design of monetary policy hinges on how other tools used to limit virus spread, such as lockdowns, are deployed. If the lockdown policy is conducted optimally, monetary policy should focus on keeping inflation on target. However, if the lockdown policy is not optimal, the central bank faces a trade-off between its objective of stabilizing inflation and the necessity to minimize the inefficiencies associated with virus spread.

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