Pub Date : 2015-09-01DOI: 10.5089/9781513516233.001
Nasha Ananchotikul, Dulani Seneviratne
Given the heavy reliance on bank lending as the main source of financing in most Asian economies, banks could potentially play a pivotal role in monetary policy transmission. However, we find that Asia?s bank lending channel or, more broadly, credit channel of domestic monetary policy is not very strong at the aggregate level. Using bank-level data for nine Asian economies during 2000?2013, we show that heterogeneity of bank characteristics (e.g., ownership type, financial position), degree of foreign bank penetration of the domestic banking sector, and global financial conditions all have a bearing on the response of domestic credit to changes in domestic monetary policy, and may account for the apparently weak credit channel at aggregate level.
{"title":"Monetary Policy Transmission in Emerging Asia: The Role of Banks and the Effects of Financial Globalization","authors":"Nasha Ananchotikul, Dulani Seneviratne","doi":"10.5089/9781513516233.001","DOIUrl":"https://doi.org/10.5089/9781513516233.001","url":null,"abstract":"Given the heavy reliance on bank lending as the main source of financing in most Asian economies, banks could potentially play a pivotal role in monetary policy transmission. However, we find that Asia?s bank lending channel or, more broadly, credit channel of domestic monetary policy is not very strong at the aggregate level. Using bank-level data for nine Asian economies during 2000?2013, we show that heterogeneity of bank characteristics (e.g., ownership type, financial position), degree of foreign bank penetration of the domestic banking sector, and global financial conditions all have a bearing on the response of domestic credit to changes in domestic monetary policy, and may account for the apparently weak credit channel at aggregate level.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"56 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121017620","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Arabic Abstract: يهدف هذا البحث المؤلف من ثلاثة فصول إلى دراسة الدور الذي يمكن أن تلعبه المؤسسات المالية الإسلامية المصرفية وغير المصرفية في تمويل التنمية الاقتصادية، وذلك من خلال استعراض بعض التجارب ذات الصلة بهدف الاستفادة منها في تفعيل دور هذه المؤسسات في تمويل مشاريع التنمية الاقتصادية في سورية وفي تمويل مرحلة إعادة الإعمار. يبحث الفصل الأول في الإطار النظري لمصادر تمويل التنمية الاقتصادية ولعمل المؤسسات المالية الإسلامية المصرفية وغير المصرفية وواقعها الراهن والعلاقة بين هذه المؤسسات والمؤسسات المالية التقليدية، في حين يبحث الفصل الثاني في دور المؤسسات المالية الإسلامية في تمويل التنمية الاقتصادية مع التركيز على الصكوك الإسلامية نظرا لأهميتها المتصاعدة في أسواق رأس المال حول العالم، مع استعراض تجارب بعض المؤسسات المالية الإسلامية المصرفية في تمويل المشاريع التنموية في السودان إضافة إلى تجربة التأمين التكافلي في ماليزيا وأخيرا تجربة الصناديق الاستثمارية الإسلامية في السعودية. يبحث الفصل الثالث والأخير في واقع تمويل التنمية الاقتصادية في سورية خلال الفترة بين عامي 2005-2011 وتحليل أداء المؤسسات المالية الإسلامية السورية في تمويل قطاعات الاقتصاد السوري، ومن ثم البحث في آليات تفعيل دور هذه المؤسسات في عملية التنمية الاقتصادية في سورية وفي تمويل مرحلة إعادة الإعمار مستقبلا. كما تم على هامش البحث إجراء استبيان بسيط على عينة من أفراد المجتمع السوري من داخل وخارج القطاع المالي بهدف الوقوف على رأيهم حول المؤسسات المالية الإسلامية المصرفية وغير المصرفية عموما والسورية على وجه الخصوص، ومدى المعرفة بمنتجات هذه المؤسسات ودورها في تمويل التنمية الاقتصادية وسبل تفعيل هذا الدور. من أهم ما توصل إليه البحث هو الدور الحيوي المباشر وغير المباشر الذي يمكن أن تلعبه المؤسسات المالية الإسلامية المصرفية وغير المصرفية في تمويل مشاريع التنمية الاقتصادية ومشاريع إعادة الإعمار في سورية جنبا إلى جنب مع المؤسسات المالية التقليدية، وذلك بشرط توافر البيئة الاقتصادية المؤاتية والنهوض بواقع هذه المؤسسات من خلال آليات رقابية ومالية واستثمارية وتشريعية وتسويقية مختلفة، لاسيما مع نجاح هذه المؤسسات في استقطاب جزء هام من مدخرات الاقتصاد السوري والحاجة الماسة والكبيرة لكافة أنواع مصادر التمويل الداخلية والخارجية في مرحلة إعادة الإعمار. English Abstract: This research tries to study the role of Islamic financial institutions (IFIs) in financing economic development, and how to activate their role in Syria especially during the post-war period. The first chapter presents a theoretical framework for the financing resources of the economic development process. In addition, it reviews the mechanism of banking and non-banking IFIs and the relationship with conventional financial institutions. The second chapter discusses the role of IFIs in financing economic development with a focus on Sukuk as a modern non-conventional financial tool in the capital markets worldwide. Besides, it reviews the figures and experience of some banking and non-banking IFIs in Sudan, Malaysia and Saudi Arabia. The last chapter reviews financing economic development in Syria during 2005-2011 with an analysis for the performance of Syrian IFIs since their inauguration in 2007 and how much did they finance
{"title":"تمويل التنمية الاقتصادية في سورية وتفعيل دور المؤسسات المالية الاسلامية Financing Economic Development in Syria and Activating the Role of Islamic Financial Institutions","authors":"M.Osama Alchaar","doi":"10.2139/ssrn.2925220","DOIUrl":"https://doi.org/10.2139/ssrn.2925220","url":null,"abstract":"Arabic Abstract: يهدف هذا البحث المؤلف من ثلاثة فصول إلى دراسة الدور الذي يمكن أن تلعبه المؤسسات المالية الإسلامية المصرفية وغير المصرفية في تمويل التنمية الاقتصادية، وذلك من خلال استعراض بعض التجارب ذات الصلة بهدف الاستفادة منها في تفعيل دور هذه المؤسسات في تمويل مشاريع التنمية الاقتصادية في سورية وفي تمويل مرحلة إعادة الإعمار. \u0000يبحث الفصل الأول في الإطار النظري لمصادر تمويل التنمية الاقتصادية ولعمل المؤسسات المالية الإسلامية المصرفية وغير المصرفية وواقعها الراهن والعلاقة بين هذه المؤسسات والمؤسسات المالية التقليدية، في حين يبحث الفصل الثاني في دور المؤسسات المالية الإسلامية في تمويل التنمية الاقتصادية مع التركيز على الصكوك الإسلامية نظرا لأهميتها المتصاعدة في أسواق رأس المال حول العالم، مع استعراض تجارب بعض المؤسسات المالية الإسلامية المصرفية في تمويل المشاريع التنموية في السودان إضافة إلى تجربة التأمين التكافلي في ماليزيا وأخيرا تجربة الصناديق الاستثمارية الإسلامية في السعودية. \u0000يبحث الفصل الثالث والأخير في واقع تمويل التنمية الاقتصادية في سورية خلال الفترة بين عامي 2005-2011 وتحليل أداء المؤسسات المالية الإسلامية السورية في تمويل قطاعات الاقتصاد السوري، ومن ثم البحث في آليات تفعيل دور هذه المؤسسات في عملية التنمية الاقتصادية في سورية وفي تمويل مرحلة إعادة الإعمار مستقبلا. \u0000كما تم على هامش البحث إجراء استبيان بسيط على عينة من أفراد المجتمع السوري من داخل وخارج القطاع المالي بهدف الوقوف على رأيهم حول المؤسسات المالية الإسلامية المصرفية وغير المصرفية عموما والسورية على وجه الخصوص، ومدى المعرفة بمنتجات هذه المؤسسات ودورها في تمويل التنمية الاقتصادية وسبل تفعيل هذا الدور. \u0000من أهم ما توصل إليه البحث هو الدور الحيوي المباشر وغير المباشر الذي يمكن أن تلعبه المؤسسات المالية الإسلامية المصرفية وغير المصرفية في تمويل مشاريع التنمية الاقتصادية ومشاريع إعادة الإعمار في سورية جنبا إلى جنب مع المؤسسات المالية التقليدية، وذلك بشرط توافر البيئة الاقتصادية المؤاتية والنهوض بواقع هذه المؤسسات من خلال آليات رقابية ومالية واستثمارية وتشريعية وتسويقية مختلفة، لاسيما مع نجاح هذه المؤسسات في استقطاب جزء هام من مدخرات الاقتصاد السوري والحاجة الماسة والكبيرة لكافة أنواع مصادر التمويل الداخلية والخارجية في مرحلة إعادة الإعمار. \u0000English Abstract: This research tries to study the role of Islamic financial institutions (IFIs) in financing economic development, and how to activate their role in Syria especially during the post-war period. \u0000The first chapter presents a theoretical framework for the financing resources of the economic development process. In addition, it reviews the mechanism of banking and non-banking IFIs and the relationship with conventional financial institutions. The second chapter discusses the role of IFIs in financing economic development with a focus on Sukuk as a modern non-conventional financial tool in the capital markets worldwide. Besides, it reviews the figures and experience of some banking and non-banking IFIs in Sudan, Malaysia and Saudi Arabia. \u0000The last chapter reviews financing economic development in Syria during 2005-2011 with an analysis for the performance of Syrian IFIs since their inauguration in 2007 and how much did they finance","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"162 4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129165764","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The East African Community (Burundi, Kenya, Rwanda, Tanzania and Uganda) has a goal of a currency union, as part of a movement toward eventual political union. A key factor in making a currency union desirable is a high level of business cycle synchronization (BCS) among member countries. In this paper we undertake a new approach to this topic with a recently developed set of tools. These tools have the advantage of yielding time-varying estimates, and, unlike previous metrics, allow us to gauge both differences of the phase of the business cycle between countries and differences in business cycle amplitude. We find BCS among the five countries does compare reasonable well with that found for euro zone nations before euro adoption. However, given the eurosi¯ difficulties, this is not strong evidence in favor of the desirability of a currency union. Moreover, Rwanda appears less well-suited, in terms of BCS, than the other four countries. In addition, all five nations have experienced sharp drops in BCS in recent years. Lastly, there has been no significant increase in BCS since the 2000 EAC Treaty, or the 2005 customs union. Overall, our results cast doubt on the desirability of an East African currency union.
{"title":"The East African Monetary Union: Is the Level of Business Cycle Synchronization Sufficient?","authors":"W. Miles","doi":"10.2139/ssrn.2613628","DOIUrl":"https://doi.org/10.2139/ssrn.2613628","url":null,"abstract":"The East African Community (Burundi, Kenya, Rwanda, Tanzania and Uganda) has a goal of a currency union, as part of a movement toward eventual political union. A key factor in making a currency union desirable is a high level of business cycle synchronization (BCS) among member countries. In this paper we undertake a new approach to this topic with a recently developed set of tools. These tools have the advantage of yielding time-varying estimates, and, unlike previous metrics, allow us to gauge both differences of the phase of the business cycle between countries and differences in business cycle amplitude. We find BCS among the five countries does compare reasonable well with that found for euro zone nations before euro adoption. However, given the eurosi¯ difficulties, this is not strong evidence in favor of the desirability of a currency union. Moreover, Rwanda appears less well-suited, in terms of BCS, than the other four countries. In addition, all five nations have experienced sharp drops in BCS in recent years. Lastly, there has been no significant increase in BCS since the 2000 EAC Treaty, or the 2005 customs union. Overall, our results cast doubt on the desirability of an East African currency union.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"48 6 Suppl 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-06-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114315106","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Kennedy wants to do justice to the poor. She wants to eliminate interest and inflation rate. This paper proves that her theory is based on four misunderstandings, and that her theory actually results in even higher interest and inflation rate. Kennedy has instead inflicted injustice.
{"title":"Refuting Kennedy's Interest and Inflation Free Money Theory","authors":"Hak Choi","doi":"10.2139/ssrn.2607317","DOIUrl":"https://doi.org/10.2139/ssrn.2607317","url":null,"abstract":"Kennedy wants to do justice to the poor. She wants to eliminate interest and inflation rate. This paper proves that her theory is based on four misunderstandings, and that her theory actually results in even higher interest and inflation rate. Kennedy has instead inflicted injustice.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"437 1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-05-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134196010","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2015-05-01DOI: 10.5089/9781484362266.001.A001
F. Jamaludin, V. Klyuev, Anuk Serechetapongse
Growth has been sluggish in Pacific island countries (PICs). High cost of credit is likely one of the reasons. While the small scale, geographic dispersion, and vulnerability to shocks increase the cost and risk of credit in this country group, there is considerable variability in interest rate spreads both across countries and over time. This paper examines the determinants of lending rates and interest rate spreads in a panel of six PICs, extending the literature that was largely descriptive in nature or focused on a single country. Our results are in line with economic theory. We find that the size of the economy is negatively correlated with spreads, confirming the importance of scale. Inflation appears to have only marginal impact on spreads. High loan loss provisions and nonperforming loans increase the cost of credit. So does banking system concentration. Higher institutional quality is associated with lower spreads.
{"title":"What Drives Interest Rate Spreads in Pacific Island Countries? An Empirical Investigation","authors":"F. Jamaludin, V. Klyuev, Anuk Serechetapongse","doi":"10.5089/9781484362266.001.A001","DOIUrl":"https://doi.org/10.5089/9781484362266.001.A001","url":null,"abstract":"Growth has been sluggish in Pacific island countries (PICs). High cost of credit is likely one of the reasons. While the small scale, geographic dispersion, and vulnerability to shocks increase the cost and risk of credit in this country group, there is considerable variability in interest rate spreads both across countries and over time. This paper examines the determinants of lending rates and interest rate spreads in a panel of six PICs, extending the literature that was largely descriptive in nature or focused on a single country. Our results are in line with economic theory. We find that the size of the economy is negatively correlated with spreads, confirming the importance of scale. Inflation appears to have only marginal impact on spreads. High loan loss provisions and nonperforming loans increase the cost of credit. So does banking system concentration. Higher institutional quality is associated with lower spreads.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126650748","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Allan Wright, Francisco Ramirez de Leon, Rumile Arana
Our paper addresses the issue of the interaction between monetary and macroprudential policies in small open economies for different exchange rate regimes. The need for macroprudential policy arises from exacerbated macroeconomic fluctuations due to frictions in the financial system as in Bernanke, Gertler and Gilchrist (1999). Understanding these dynamics in developing nations has been even more important after the most recent events of the Great Recession. Policy makers within the scrutinized economies will see the exact magnitude of shocks caused by changes in financial frictions, monetary and macroprudential policy. Exchange rate considerations are also brought to the fore, by assessing the effects of these policies on two emerging economies from the Caribbean with differing monetary policy frameworks. Despite differences between flexible and fear of floating exchange rate regimes, macroprudential policies implementation help mitigate the effects of credit supply shocks affecting regional economies.
{"title":"Interaction of Monetary and Macroprudential Policies in Developing Economies","authors":"Allan Wright, Francisco Ramirez de Leon, Rumile Arana","doi":"10.2139/ssrn.2493987","DOIUrl":"https://doi.org/10.2139/ssrn.2493987","url":null,"abstract":"Our paper addresses the issue of the interaction between monetary and macroprudential policies in small open economies for different exchange rate regimes. The need for macroprudential policy arises from exacerbated macroeconomic fluctuations due to frictions in the financial system as in Bernanke, Gertler and Gilchrist (1999). Understanding these dynamics in developing nations has been even more important after the most recent events of the Great Recession. Policy makers within the scrutinized economies will see the exact magnitude of shocks caused by changes in financial frictions, monetary and macroprudential policy. Exchange rate considerations are also brought to the fore, by assessing the effects of these policies on two emerging economies from the Caribbean with differing monetary policy frameworks. Despite differences between flexible and fear of floating exchange rate regimes, macroprudential policies implementation help mitigate the effects of credit supply shocks affecting regional economies.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"71 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-04-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123946954","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
2015 is likely to be a year of contrasts in which a difficult and uncertain start will most probably give way to a promising end, as renewed post-election economic reform efforts to address fiscal, structural, and financial challenges highlighted by low oil price and weak capital inflows on the eve of election will open up new growth and investment opportunities, thereby brightening the outlook. Thus, while the twin external shocks on the eve of general elections had imposed short term challenges and created significant uncertainties about the economic outlook in 2015, they have also beneficially elevated the place of economic and fiscal reforms in the pre-election conversation. A strong consensus for reforms has fortuitously been built among the populace that it makes sense to expect a high pace of reforms after the election. This will brighten the outlook for the second half of 2015 and beyond. Specifically the three big gains within Nigeria’s reach are: (a.) Nigeria’s fiscal outlook can easily be stabilized by revenue reforms that provides the fiscal space required for growth and stability; (b.) Breaking government monopoly in key potentially large economic sectors and allowing entry of reputable private firms will release fresh growth and investment impetus; (c.) Foreign longer-term financial inflows that will be attracted to the liberalized sectors will reduce Nigeria’s dependence on volatile short term capital inflows. Nigeria is clearly coming up with a better contemplation of her economic and financial future, and it should be easier to engage others to come and invest in that future.
{"title":"Nigeria's Economic Outlook in 2015","authors":"Ayo Teriba","doi":"10.2139/ssrn.2563975","DOIUrl":"https://doi.org/10.2139/ssrn.2563975","url":null,"abstract":"2015 is likely to be a year of contrasts in which a difficult and uncertain start will most probably give way to a promising end, as renewed post-election economic reform efforts to address fiscal, structural, and financial challenges highlighted by low oil price and weak capital inflows on the eve of election will open up new growth and investment opportunities, thereby brightening the outlook. Thus, while the twin external shocks on the eve of general elections had imposed short term challenges and created significant uncertainties about the economic outlook in 2015, they have also beneficially elevated the place of economic and fiscal reforms in the pre-election conversation. A strong consensus for reforms has fortuitously been built among the populace that it makes sense to expect a high pace of reforms after the election. This will brighten the outlook for the second half of 2015 and beyond. Specifically the three big gains within Nigeria’s reach are: (a.) Nigeria’s fiscal outlook can easily be stabilized by revenue reforms that provides the fiscal space required for growth and stability; (b.) Breaking government monopoly in key potentially large economic sectors and allowing entry of reputable private firms will release fresh growth and investment impetus; (c.) Foreign longer-term financial inflows that will be attracted to the liberalized sectors will reduce Nigeria’s dependence on volatile short term capital inflows. Nigeria is clearly coming up with a better contemplation of her economic and financial future, and it should be easier to engage others to come and invest in that future.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"50 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-02-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131083720","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Alfredo Baldini, Jaromı́r Beneš, A. Berg, Mai Dao, Rafael A. Portillo
We develop a dynamic stochastic general equilibrium model with a banking sector to analyse the impact of the financial crisis in developing countries and the role of the monetary policy response, with an application to Zambia. We view the crisis as a combination of three related shocks: a worsening in the terms of the trade, an increase in the country's risk premium and a decrease in the risk appetite of local banks. Model simulations broadly match the path of the economy during this period. We derive policy implications for central banks, and for dynamic stochastic general equilibrium modelling of monetary policy, in low‐income countries.
{"title":"Monetary Policy in Low Income Countries in the Face of the Global Crisis: A Structural Analysis","authors":"Alfredo Baldini, Jaromı́r Beneš, A. Berg, Mai Dao, Rafael A. Portillo","doi":"10.1111/1468-0106.12098","DOIUrl":"https://doi.org/10.1111/1468-0106.12098","url":null,"abstract":"We develop a dynamic stochastic general equilibrium model with a banking sector to analyse the impact of the financial crisis in developing countries and the role of the monetary policy response, with an application to Zambia. We view the crisis as a combination of three related shocks: a worsening in the terms of the trade, an increase in the country's risk premium and a decrease in the risk appetite of local banks. Model simulations broadly match the path of the economy during this period. We derive policy implications for central banks, and for dynamic stochastic general equilibrium modelling of monetary policy, in low‐income countries.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127802903","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
There is partial consensus that the size of money — or liquidity — in China should be large reflecting the high savings rate. Even so, with a sense of a liquidity overhang from the recent monetary expansion, many caution against expanding liquidity further lest it translate into a property bubble. Instead, they argue for ways to speed up the circulation of liquidity — in other words to raise velocity — to stimulate the real economy. The recent growth of the non-banking system adds to these concerns, and has been criticized as falling short of promoting effective financial intermediation. Some even claim that the monetary authorities may be losing control over the growth of key monetary aggregates. Against this background, this paper reviews recent monetary developments in China and considers how monetary aggregates and the financial system may have to change to support the rebalancing of the economy.
{"title":"Rethinking Monetary and Financial Policies in China","authors":"I. Lee, M. Syed, Da Young Yang","doi":"10.2139/ssrn.2495187","DOIUrl":"https://doi.org/10.2139/ssrn.2495187","url":null,"abstract":"There is partial consensus that the size of money — or liquidity — in China should be large reflecting the high savings rate. Even so, with a sense of a liquidity overhang from the recent monetary expansion, many caution against expanding liquidity further lest it translate into a property bubble. Instead, they argue for ways to speed up the circulation of liquidity — in other words to raise velocity — to stimulate the real economy. The recent growth of the non-banking system adds to these concerns, and has been criticized as falling short of promoting effective financial intermediation. Some even claim that the monetary authorities may be losing control over the growth of key monetary aggregates. Against this background, this paper reviews recent monetary developments in China and considers how monetary aggregates and the financial system may have to change to support the rebalancing of the economy.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"180 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-08-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124491472","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Monetary and fiscal institutions have played a decisive role in the stabilisation of the Brazilian economy since the mid-1990s. Brazil’s experience of designing and managing institutions to this end is likely to be of interest to other emerging and low- or middle-income economies. In Brazil institutional reforms were predominantly made in response to a succession of internal and, particularly, external crises. Indeed, perhaps nowhere in the world has inflation received as much attention from economists as in Brazil. The consequent accumulation of theoretical and practical knowledge resulted in a wealth of theories about the nature of Brazilian inflation. As such, the Brazilian experience offers many lessons to be learned, both in the sense of what could be done and what is better avoided. When it abandoned the exchange rate anchor, Brazil was one of the first emerging economies to adopt a system of inflation targets. In the area of fiscal policy, a succession of institutional changes – from changes in the budget and management of the public debt to the fiscal adjustment of regional governments – culminated in the adoption of the Fiscal Responsibility Law shortly after the introduction of new monetary and exchange policies. However, consolidation of the new currency, the Real, and accelerated growth shortly after the turn of the century, followed by the global financial crisis, meant that the agenda of structural reforms was abandoned. New aspects were introduced to economic policy, such as a strong link between the growth of public debt and credit supply.Recent stagnation, with repeated years of low growth, inflation pushing at the ceiling of its target, and primary surplus below its target, sets new challenges for the Brazilian economy.
{"title":"Institutions for Macro Stability in Brazil: Inflation Targets and Fiscal Responsibility","authors":"J. Afonso, E. Araujo","doi":"10.2139/ssrn.2501394","DOIUrl":"https://doi.org/10.2139/ssrn.2501394","url":null,"abstract":"Monetary and fiscal institutions have played a decisive role in the stabilisation of the Brazilian economy since the mid-1990s. Brazil’s experience of designing and managing institutions to this end is likely to be of interest to other emerging and low- or middle-income economies. In Brazil institutional reforms were predominantly made in response to a succession of internal and, particularly, external crises. Indeed, perhaps nowhere in the world has inflation received as much attention from economists as in Brazil. The consequent accumulation of theoretical and practical knowledge resulted in a wealth of theories about the nature of Brazilian inflation. As such, the Brazilian experience offers many lessons to be learned, both in the sense of what could be done and what is better avoided. When it abandoned the exchange rate anchor, Brazil was one of the first emerging economies to adopt a system of inflation targets. In the area of fiscal policy, a succession of institutional changes – from changes in the budget and management of the public debt to the fiscal adjustment of regional governments – culminated in the adoption of the Fiscal Responsibility Law shortly after the introduction of new monetary and exchange policies. However, consolidation of the new currency, the Real, and accelerated growth shortly after the turn of the century, followed by the global financial crisis, meant that the agenda of structural reforms was abandoned. New aspects were introduced to economic policy, such as a strong link between the growth of public debt and credit supply.Recent stagnation, with repeated years of low growth, inflation pushing at the ceiling of its target, and primary surplus below its target, sets new challenges for the Brazilian economy.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129862376","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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