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| Author | : Sangyup Choi |
| Publisher | : International Monetary Fund |
| Total Pages | : 61 |
| Release | : 2022-01-28 |
| Genre | : Business & Economics |
| ISBN | : |
Download Revisiting the Monetary Transmission Mechanism Through an Industry-Level Differential Approach Book in PDF, ePub and Kindle
By combining industry-level data on output and prices with monetary policy rates for a panel of 88 countries, this paper analyzes how the effects of monetary policy vary with certain industry characteristics. Next to being interesting in their own right, our results are informative on the importance of various transmission mechanisms (as they are expected to vary systematically with the included characteristics). Rather than relying on standard monetary policy shock identification, we overcome the endogeneity problem by taking a differential approach (interacting our monetary policy measure with industry-level characteristics). Our results suggest that monetary contractions reduce output by more in industries featuring assets that are more difficult to collateralize (as predicted by the balance sheet channel) and in industries more reliant on international trade (as predicted by the exchange rate channel). Consistent with the financial accelerator mechanism, we find that the balance sheet channel becomes stronger during bad times. At the same time, we do not find evidence supporting the traditional interest rate channel of monetary policy; the same goes for the cost channel.
| Author | : Joaquim Vieira Ferreira Levy |
| Publisher | : |
| Total Pages | : |
| Release | : 1997 |
| Genre | : |
| ISBN | : |
Download Aspects of the Monetary Transmission Mechanism Under Exchange Rate Targeting Book in PDF, ePub and Kindle
| Author | : Mr.Luis Brandao-Marques |
| Publisher | : International Monetary Fund |
| Total Pages | : 54 |
| Release | : 2020-02-21 |
| Genre | : Business & Economics |
| ISBN | : 1513529730 |
Download Monetary Policy Transmission in Emerging Markets and Developing Economies Book in PDF, ePub and Kindle
Central banks in emerging and developing economies (EMDEs) have been modernizing their monetary policy frameworks, often moving toward inflation targeting (IT). However, questions regarding the strength of monetary policy transmission from interest rates to inflation and output have often stalled progress. We conduct a novel empirical analysis using Jordà’s (2005) approach for 40 EMDEs to shed a light on monetary transmission in these countries. We find that interest rate hikes reduce output growth and inflation, once we explicitly account for the behavior of the exchange rate. Having a modern monetary policy framework—adopting IT and independent and transparent central banks—matters more for monetary transmission than financial development.
| Author | : Mr. Pragyan Deb |
| Publisher | : International Monetary Fund |
| Total Pages | : 59 |
| Release | : 2023-10-17 |
| Genre | : Business & Economics |
| ISBN | : |
Download Monetary Policy Transmission Heterogeneity: Cross-Country Evidence Book in PDF, ePub and Kindle
This paper revisits the transmission of monetary policy by constructing a novel dataset of monetary policy shocks for an unbalanced sample of 33 advanced and emerging market economies during the period 1991Q2-2023Q2. Our findings reveal that tightening monetary policy swiftly and negatively impacts economic activity, but the effects on inflation and inflation expectations takes time to fully materialize. Notably, there exist significant heterogeneities in the transmission of monetary policy across countries and time, depending on structural characteristics and cyclical conditions. Across countries, monetary policy is more effective in countries with flexible exchange rate regime, more developed financial systems, and credible monetary policy frameworks. In addition, we find that monetary policy transmission is stronger when uncertainty is low, financial conditions are tight and monetary policy is coordinated with fiscal policy—that is, when the stances move in the same direction.
| Author | : Ms.Deniz Igan |
| Publisher | : International Monetary Fund |
| Total Pages | : 38 |
| Release | : 2013-07-03 |
| Genre | : Business & Economics |
| ISBN | : 1484343506 |
Download Monetary Policy and Balance Sheets Book in PDF, ePub and Kindle
This paper evaluates the strength of the balance sheet channel in the U.S. monetary policy transmission mechanism over the past three decades. Using a Factor-Augmented Vector Autoregression model on an expanded data set, including sectoral balance sheet variables, we show that the balance sheets of various economic agents act as important links in the monetary policy transmission mechanism. Balance sheets of financial intermediaries, such as commercial banks, asset-backed-security issuers and, to a lesser extent, security brokers and dealers, shrink in response to monetary tightening, while money market fund assets grow. The balance sheet effects are comparable in magnitude to the traditional interest rate channel. However, their economic significance in the run-up to the recent financial crisis was small. Large increases in interest rates would have been needed to avert a rapid rise of house prices and an unsustainable expansion of mortgage credit, suggesting an important role for macroprudential policies.
| Author | : Jesper Lindé |
| Publisher | : International Monetary Fund |
| Total Pages | : 54 |
| Release | : 2017-07-07 |
| Genre | : Business & Economics |
| ISBN | : 1484306112 |
Download The Macroeconomic Effects of Trade Tariffs Book in PDF, ePub and Kindle
We study the robustness of the Lerner symmetry result in an open economy New Keynesian model with price rigidities. While the Lerner symmetry result of no real effects of a combined import tariff and export subsidy holds up approximately for a number of alternative assumptions, we obtain quantitatively important long-term deviations under complete international asset markets. Direct pass-through of tariffs and subsidies to prices and slow exchange rate adjustment can also generate significant short-term deviations from Lerner. Finally, we quantify the macroeconomic costs of a trade war and find that they can be substantial, with permanently lower income and trade volumes. However, a fully symmetric retaliation to a unilaterally imposed border adjustment tax can prevent any real or nominal effects.
| Author | : Mr.Simon T Gray |
| Publisher | : International Monetary Fund |
| Total Pages | : 176 |
| Release | : 2013-05-15 |
| Genre | : Business & Economics |
| ISBN | : 1475590563 |
Download Monetary Issues in the Middle East and North Africa Region Book in PDF, ePub and Kindle
This paper documents the main themes covered in two seminars (December 2011 and September 2012) on monetary policy and implementation at the IMF—Middle East Center for Economics and Finance, and includes country case studies. Against the backdrop of the global financial crisis and swings in cross-border capital flows, operational frameworks have become more flexible, and liquidity management has impacted the relationship between the policy rate corridor and market rates. The balance sheet structure of central banks in the Middle East and North Africa (MENA) shows differences between oil exporters and others, while a few countries have exhibited notable changes since early 2011. Collateral now has a significant financial stability function. Although only one MENA country is part of the G20, implementation of the Basel III bank capital adequacy and liquidity rules will most likely impact banks’ way of doing business in MENA countries, even if indirectly.
| Author | : International Monetary Fund. Research Dept. |
| Publisher | : International Monetary Fund |
| Total Pages | : 657 |
| Release | : 2013-10-08 |
| Genre | : Business & Economics |
| ISBN | : 1484348834 |
Download World Economic Outlook, October 2013 Book in PDF, ePub and Kindle
Global growth is in low gear, and the drivers of activity are changing. These dynamics raise new policy challenges. Advanced economies are growing again but must continue financial sector repair, pursue fiscal consolidation, and spur job growth. Emerging market economies face the dual challenges of slowing growth and tighter global financial conditions. This issue of the World Economic Outlook examines the potential spillovers from these transitions and the appropriate policy responses. Chapter 3 explores how output comovements are influenced by policy and financial shocks, growth surprises, and other linkages. Chapter 4 assesses why certain emerging market economies were able to avoid the classical boom-and-bust cycle in the face of volatile capital flows during the global financial crisis.
| Author | : Paul Beaudry |
| Publisher | : International Monetary Fund |
| Total Pages | : 43 |
| Release | : 2018-05-30 |
| Genre | : Business & Economics |
| ISBN | : 1484354885 |
Download On the Macroeconomic Consequences of Over-Optimism Book in PDF, ePub and Kindle
Is over-optimism about a country's future growth perspective good for an economy, or does over-optimism also come with costs? In this paper we provide evidence that recessions, fiscal problems, as well as Balance of Payment-difficulties are more likely to arise in countries where past growth expectations have been overly optimistic. To examine this question, we look at the medium-run effects of instances of over-optimism or caution in IMF forecasts. To isolate the causal effect of over-optimism we take an instrumental variables approach, where we exploit variation provided by the allocation of IMF Mission Chiefs across countries. As a necessary first step, we document that IMF Mission Chiefs tend to systematically differ in their individual degrees of forecast-optimism or caution. The mechanism that transforms over-optimism into a later recession seems to run through higher debt accumulation, both public and private. Our findings illustrate the potency of unjustified optimism and underline the importance of basing economic forecasts upon realistic medium-term prospects.
| Author | : Masahiro Kawai |
| Publisher | : Edward Elgar Publishing |
| Total Pages | : 321 |
| Release | : 2012-01-01 |
| Genre | : Business & Economics |
| ISBN | : 0857933353 |
Download Monetary and Currency Policy Management in Asia Book in PDF, ePub and Kindle
Asian economies strengthened their monetary and currency management after the Asian financial crisis of 19971998, and came through the global financial crisis of 20072009 relatively well. Nevertheless, the recent global crisis has presented new challenges. This book develops recommendations for monetary and currency policy in Asian economies aimed at promoting macroeconomic and financial stability in an environment of global economic shocks and volatile capital flows. Monetary and Currency Policy Management in Asia draws lessons from crises and makes concrete macroeconomic policy recommendations aimed at minimizing the impacts of an economic and financial downturn, and setting the stage for an early return to sustainable growth. The focus is on short-term measures related to the cycle. The three main areas addressed are: monetary policy measures, both conventional and unconventional, to achieve both macroeconomic and financial stability; exchange rate policy and foreign exchange reserve management, including the potential for regional cooperation to stabilize currency movements; and ways to ease the constraints on policy resulting from the so-called 'impossible trinity' of fixed exchange rates, open capital accounts and independent monetary policy. This is one of the first books since the global financial crisis to specifically and comprehensively address the implications of the crisis for monetary and currency policy in emerging market economies, especially in Asia. Presenting a broad menu of policy options for financial reform and regulation, the book will be of great interest to finance experts and policymakers in the region as well as academics and researchers of financial and Asian economics as well as economic development.
