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We consider the influence of domestic and U.S. macro‐economic news surprises on daily bond yields over the January 1999 to January 2018 period for four advanced negative interest rate policy (NIRP) economies—Germany, Japan, Sweden, and Switzerland. Our results suggest that the influence of macro‐economic news surprises is for all four countries under study during the NIRP period nonexistent or noticeably weaker than during the preceding zero interest rate policy (ZIRP) period. Our results are consistent with the suggestion that NIRP is characterized by a lower bound that is no less constraining than the zero‐lower bound that characterizes ZIRP. [ABSTRACT FROM AUTHOR]

The article examines the factors driving inflation in 2022-2023. We explore why inflation in the Hungarian economy has risen more sharply compared to neighboring countries with similar economic structures. The goal of the article is to highlight these factors and provide policymakers with recommendations for a more resilient inflation policy. First, we respond to Katalin Botos' views on inflation, and then we analyze some global inflationary trends. Our study focuses specifically on inflation in the agricultural sector. Our findings indicate that, in addition to global cost-push inflationary pressures, several country-specific factors have contributed to the rise in domestic inflation. Energy prices have surged, and some supply chains in the East have been disrupted. For Hungary's less productive but energy-intensive food industry, the energy price shock, combined with higher exchange rate volatility in 2022-2023 compared to neighboring countries, has had a strong impact in the short to medium term, causing significant deviations from long-term equilibrium. In our view, beyond enhancing food self-sufficiency, special attention should be given to the domestic development of the agricultural supply chain. [ABSTRACT FROM AUTHOR]

In the first half of 2022, China issued a package of policies to stabilize the economy, which proposed to expand credit supply and promote the steady decline of real loan interest rates. However, at the beginning of COVID-19, the policy of interest rate reduction in major economies such as the US and Britain failed to effectively stimulate economic recovery, even led to increased pressure on economic stagflation risk and the rising of asset prices, which should be taken as a warning by China. This paper uses data from Wind database, the Peoples's Bank of China and CIEnet statistics database. It constructs a mixed-frequency and markov-switching dynamic factor(MF-MS-DFM)model to measure the business cycle of China's economy, then examines the impact of interest rate cuts on macroeconomic and asset prices and the role of financial credit channel during different periods of economic cycle by constructing a counterfactual structural vector auto-regressive(CSVAR)model. The results show that during the economic expansion period, the interest rate reduction will accelerate the expansion of financial credit, and the financial credit channel can amplify the stimulating effect of the interest rate reduction on the macro-economy, but during the economic contraction period, the interest rate reduction will slow down the expansion of financial credit, and the financial credit channel will weaken the boosting effect of the interest rate reduction on the macroeconomy. During the period of economic expansion, the financial credit channel will magnify the devaluation effect of interest rate reduction on RMB, strengthen the role of interest rate reduction in pushing up house prices and stock prices, and mitigate the rise in bond prices caused by interest rate reduction. This paper proves that 1)the financial credit channel is an important factor in the effect of interest rate reduction on macroeconomic boost, and financial credit channel in the economic contraction period may cause the interest rate reduction to be unable to effectively stimulate the economic recovery; 2)during the economic expansion period, the housing price and the stock price rise after the interest rate reduction exist credit driven factor. Compared with the existing literature of the same kind, this paper makes the following three extensions: first, this paper takes into account the pro-cyclical nature of financial credit in the empirical research design. To accomplish this objective, it conducts a regional study on the sample data in the economic expansion period and the economic contraction period to make the research results more accurate and targeted. Secondly, in the view of data which are applicated, a single frequency of data is not used, but mixed frequency data is used to measure the economic cycle and construct macroeconomic indicators, retaining complete data information to make the measurement results of the economic cycle and the measurement of macroeconomic development level more reliable; Thirdly, in the view of model methodology, a counterfactual approach was used to strip away the impact of financial credit channel interference in the policy effect of interest rate cuts. By comparing the estimated results of benchmark models, the role of financial credit channel in the transmission mechanism of interest rate cuts can be accurately and intuitively demonstrated. The research in this article proves that financial credit channel is an important reason for the differences in the effects of interest rate reduction policies in different economic cycle stages. It provides references for the central bank to pay attention to the direction of interest rate policy formulation in different economic cycle stages, helps the central bank process interest rate policies more finely, and guides the central bank to enhance the macroeconomic boosting effect of interest rate reduction through financial credit management. [ABSTRACT FROM AUTHOR]

The large-scale war of the Russian Federation against Ukraine, causing colossal damage to Ukrainian society and economy, led to a significant increase in state spending, primarily on defense, which required the maximum mobilization of external and internal sources of financing the budget deficit. The national currency was subjected to strong inflationary and devaluation pressure, which required an immediate response from the National Bank of Ukraine (hereinafter referred to as the NBU). The general background for the abovementioned dramatic events was the "post-Covid" acceleration of inflation rates in the world and the resulting increase in interest rates by the leading central banks. The article analyzes the key decisions of the NBU in the field of monetary policy during the war from the point of view of their compliance with the challenges of wartime and in the context of the main trends of monetary regulation in the world. It was concluded that the NBU managed to ensure macro-financial stability, but its monetary policy did not fully take into account the needs of the state in financing military expenditures. [ABSTRACT FROM AUTHOR]

The influence of the interest policy of the National Bank of Ukraine on the dynamics of lending to non-financial corporations during the period of using the monetary regime of fixed exchange rate and inflation targeting is considered. It has been proven, that the use of the symmetric corridor of the interest policy of the National Bank of Ukraine has a negative effect on the volume of lending to non-financial corporations, since high rates on deposit certificates of the National Bank of Ukraine create a risk-free and highly profitable instrument for the placement of bank assets, which discourages lending to the real sector of the economy. The absence of a connection between the interest rate policy and the dynamics of the consumer price index and the money supply during the period of inflation targeting is substantiated, which made it possible to prove the low level of effectiveness of the chosen monetary regime. The aim of the article is to study the problems of bank lending to non-financial corporations of Ukraine in the conditions of inflation targeting and to develop proposals for its stimulation, taking into account foreign experience. Methods. The methodological basis of the work is the dialectical method of cognition, the policy and credit. The work uses methods of economic and mathematical statistics and methods of correlation analysis to analyze the features of lending to non-financial corporations and the impact of inflation targeting on the dynamics of bank lending; generalization methods for formulating research conclusions. Results. The monetary regime of inflation targeting is quite often recommended by the International Monetary Fund for implementation in countries with emerging markets as a basic set of central bank tools for regulating inflation and ensuring price stability. However, in conditions of import dependence of the national economies of countries with emerging markets, in addition to changes in the money supply and credit activity of banks, the dynamics of export-import operations and the volume of official reserve assets, which determine the level of the exchange rate, have a decisive influence on the dynamics of the consumer price index, and it, in turn, determines the level of prices for imported goods and services. Neglecting the non-monetary factors of supply inflation during the implementation of the interest policy leads to the limitation of bank lending to non-financial corporations, which in turn reduces the ability of enterprises to increase capital investments at the expense of bank loans, as well as to develop domestic production with high added value and to implement the policy of import substitution. Therefore, for this purpose, it is necessary to use the asymmetric corridor of the central bank's interest policy and stimulate targeted bank lending to non-financial corporations. [ABSTRACT FROM AUTHOR]

Objective: to consider the digital currency of Central Banks as the third form of money of a state; to identify advantages and disadvantages of this new form of money; to clarify the classification of digital currency of the Central Bank; to analyze the features of infrastructure development of the Central banks fast payments system and private stable coins market; to present the author’s conception of the Bank of Russia digital ruble.Methods: the article uses empirical, historical, logical, country-oriented, comparative and statistical methods of the system approach, which allow studying the possible designs of the Central Bank digital currency in dynamics.Results: the article reveals the macroeconomic factors of the emergence of the Central Bank digital currency; defines the types of classification of the Central Bank digital currency; shows the possible pros and cons of issuing and circulating of the third form of state money; considers the fast payments system and the private stable coins market; clarifies some consequences for monetary and financial stability policy during the transition of the Central Bank to digital currency; shows the advantages and disadvantages of the Central Bank digital currency through the prism of three aspects: the anonymity level, the confidentiality degree and the guaranteed remuneration for market participants; and analyzes the features of the Bank of Russia digital ruble development in the medium term.Scientific novelty: the article shows that the Central Bank digital currency is just the third form of state money, along with cash and non-cash; classification of digital currency has allowed the Central Bank to identify the features of the possible design of digital currency; the prospects and problems of price and financial stability in terms of the circulation of digital currency are considered; an alternative to the Central Banks digital currency is the system of fast payments and private stable coins market; The Bank of Russia should build the digital ruble design on the basic characteristics of the banking system of the Russian Federation (Model D) and the mechanisms combining the technologies of the centralized and distributed ledgers of the Bank of Russia. Practical significance: the main provisions and conclusions of the article can be used to develop a possible design of the digital ruble in the medium term, as well as to clarify the Bank of Russia current target mandates, tools, channels and mechanisms of monetary and financial stability policy, directly related to new trends in the development of both the world economy in general and the Russian economy in particular.

The subject of the study is the financial system and monetary regulation of the economy during the COVID-19 coronavirus pandemic. The purpose of the article is to investigate the monetary policy pursued by the national Central banks of developed countries in the context of the economic crisis caused by pandemic. The paper uses comparative analysis, a systematic approach to the study of information, as well as graphical and tabular methods. The author considers monetary policy instruments used by national Central banks of developed countries to mitigate the impact of the pandemic on the real sector of the economy. The study reveals distinctive features of anti-crisis measures of monetary regulation bodies.

Money is both the medium for transaction and the most liquid asset for banks. We examine both roles of money in an integrated framework, where banks are subject to aggregate illiquidity risk. An active central bank can replicate the constrained efficient allocation, which, however, cannot be implemented in the market equilibrium: due to moral hazard problems, banks invest excessively in illiquid assets, forcing the central bank to provide liquidity at low interest rates. An interest rate policy aiming to reduce systemic liquidity risk is dynamically inconsistent. Instead, the constrained efficiency can be achieved by imposing ex ante liquidity coverage requirement. [ABSTRACT FROM AUTHOR]

This paper presents an analysis of the impact of the Bank of Japan’s low-interest rate policy on the banking sector in the wake of the 1998 Japanese financial crisis. We show how the low-cost liquidity provision as a means to stabilize banks has created a growing gap between deposits and loans in the financial system and how the low-interest rate policy has compressed interest margins as the traditional source of banks’ income. Efficiency scores are compiled to estimate the effect of the Bank of Japan’s monetary policy on banks’ technical efficiency. The estimation results provide evidence that the Japanese monetary policy has contributed to declining efficiency in the banking sector, despite – or possibly because of – the increasing concentration within this sector. [ABSTRACT FROM AUTHOR]

The article presents an analysis of interest rate policy of the Central Bank of the Russian Federation in promoting economic growth through the development of credit relations.

The approaches of various authors to the assessment of the impact of monetary policy on the development of the economy have been considered. The main factors of positive and negative influence of interest rate monetary policy on economic development have been established. Features of influence of monetary policy on development of the developed and developing States have been revealed. It has been defined, that the strength of the influence of individual factors on the effectiveness of monetary policy in individual countries varies, and the appropriateness of using monetary policy to support economic growth is determined by the ratio of the total positive and total negative impact. Recommendations on the construction of monetary policy taking into account its positive and negative impact on the development of the economy have been given. They aim at a gradual transition to the use of monetary policy to support growth, to take into account all the factors of influence and the integrated use of all instruments of monetary and fiscal policy to stimulate growth, the achievement of other strategic objectives.

Introduction. The article analyzes the existing trends in the field of bank lending during the crisis of 2014-2017. The reasons for the decline in lending activity of domestic banks are considered. Mechanisms for intensifying bank lending as a necessary condition for ensuring economic growth in Ukraine are proposed. Methods. General scientific methods of cognition, induction, deduction and comparison are used in the article. Statistical and graphical methods and the method of mathematical modelling were used to analyse the causes and consequences of the decline in banks' lending activity. The system method was used in the development of proposals and recommendations. Results. Bank lending in Ukraine during the economic crisis of 2014-2017 and pandemic shocks is studied. Negative factors influencing the credit activity of banks have been identified. The main miscalculations of the National Bank of Ukraine, the Government and the legislature in the field of creating conditions for stimulating the lending activity of banking institutions are substantiated. With the help of cluster analysis, domestic banks are grouped into four clusters according to the level of their participation in lending to the Ukrainian economy. Discussion. The peculiarities of bank lending to domestic enterprises at the present stage are highlighted. Based on the analysis of the development of bank lending in Ukraine, promising strategies for intensifying bank lending support to the real sector of the national economy have been developed. [ABSTRACT FROM AUTHOR]

Several recent papers agree on the existence of significant regime shifts in the U.S. real interest rate, but disagree on the proximate causes of the shifts. Caporale and Grier (2000) point to large political changes as correlates, while Rapach and Wohar (2004) show that real rate breaks are correlated with inflation regime shifts and argue that the inflation regime changes cause the real rate shifts. In this paper we show that, controlling for the timing of changes in the inflation regime, dummy variables representing either party change in the Presidency or change in the identity of the Fed Chair are still strongly significant for explaining real interest rate fluctuations. When we control for a fixed coefficient linear relationship between inflation and the real rate, we find two real rate regime shifts that line up almost exactly with the accessions of Paul Volcker and Alan Greenspan. Even if we first let inflation regime switches explain the real rate and then look for regime shifts in the residuals, we find almost exactly the same two breaks. These results imply that Fed Chairs sometimes differ with respect to their preferred equilibrium real interest rate. [ABSTRACT FROM AUTHOR]

The monetary policy rate is besides a monetary instrument and a monetary policy measure of the central banks. Communication of decisions on the level of official monetary policy rates targets the stability of prices. The confluence between the macroeconomic indicators and the monetary policy rate is the place where the monetary policy measures meet with the main indicators that reflect the state of the economy over a certain period of time. In this paper I will present a reflection on the situation of the main indicators: GDP, inflation and unemployment, as well as the monetary policy rate imposed by the central banks. As a method of research we used the analysis of the mechanism of transmission of monetary policy decisions at the confluence with the main macroeconomic indicators.

In the context of increased geopolitical risks, the systemic problems of existing model of integration of Russia into the international division of labor and cross-border capital fl ws dramatically aggravated. Changes in external conditions of functioning of the national economy make it necessary to radically revise approaches to setting up foreign economic relations of the country. It is obvious that in the current environment the economic development model based on the forced export of energy resources combined with increasing foreign assets and large-scale borrowing on the international capital market has become outdated. The paper describes a radically new mobilization model of monetary and fi regulation in Russia in order to meet external challenges. Three main areas of the model are discussed in detail. Firstly, aiming at preferential use of natural resources for the development of domestic industries and minimizing exports of hydrocarbon reserves; restrict import to a minimum set of goods whose production in the Russian Federation is complicated or impossible (model of economic autarchy). Secondly, the cancellation of expansion of the national capital abroad and rejection of the idea of creating value chains abroad; mobilization of investment resources placed overseas and redirecting them to repay existing foreign liabilities (fi autarchy model). Thirdly, the creation of institutional environment to ensure fi stability and national security (the model of long-term fi security).It is concluded that the optimization of model of monetary and financial regulation should eliminate the negative effects of global imbalances and the subordinate position of the country in the international division of labor.

Мета статті полягає у дослідженні взаємозвʼязку відсоткової політики Ради керуючих ФРС та відповідної макроекономічної політики Європейського центрального банку. Дослідження проводилося для аналізу ступеню взаємозвʼязку ставки федеральних фондів та ставки основних операцій рефінансування ЄЦБ, а також їх причинно- наслідкових звʼязків. Це дослідження підтверджує твердження щодо впливу монетарної політики Ради керуючих ФРС на відсоткову політику інших центральних банків. У статті проаналізовано монетарний інструментарій ФРС, досліджено основні кредитні та депозитні відсоткові ставки, які встановлюються чи таргетуються Радою керуючих ФРС. Проведено дослідження основних монетарних інструментів Європейського центрального банку. Визначено ключові відсоткові ставки, що використовуються ЄЦБ для реалізації монетарної політики у зоні «євро». Ставка федеральних фондів та ставка основних операцій рефінансування ЄЦБ є ключовими відсотковими ставками Сполучених Штатів Америки та Європейського Союзу відповідно. Ці ставки є індикаторами грошово-кредитної політики, впливають на інвестиційні рішення і мають значний вплив на фінансові ринки. У дослідженні для аналізу взаємозв'язку ставки федеральних фондів і ставки основних операцій рефінансування ЄЦБ був використаний кореляційний тест Пірсона. Для вивчення причинно-наслідкових зв'язків був використаний тест причинності Грейнджера. Кореляційний аналіз виявив суттєву залежність між ставкою федеральних фондів та ставкою основних операцій рефінансування ЄЦБ. Зв’язок цих процентних ставок є позитивним. Провідна роль ставки федеральних фондів була перевірена тестом причинності Грейнджера. Тест причинності Грейнджера проведений для періоду 1999- 2018 років продемонстрував, що зміна ставки федеральних фондів спричиняє зміну ставки основних операцій рефінансування ЄЦБ. Дослідження показали, що найсильніший вплив спостерігається у випадку аналізу з використання лагу у 2 і 3 роки. Результати цього дослідження узгоджуються з дослідженнями інших науковців (М. Мандлера, А. Белке та ін.).

The literature on political business cycles focuses on elected incumbents and neglects the incentives of appointed officials. We present evidence of rate hikes before elections when the chair of the US Federal Reserve is from a different party than the incumbent president. This finding contrasts with the traditional belief that an inappropriate policy-rate bias implies a more expansive pre-election policy stance. We also find weak evidence that rates are lowered when the chair and president are from the same party. The evidence that ideological preferences of the chair matter remains even when we control for career motives. [ABSTRACT FROM AUTHOR]

We examine the extent to which government ideology has influenced monetary policy in OECD countries since the 1970s. In line with important changes in the global economy and differences across countries, regression results yield heterogeneous inferences depending on the time period and the exchange rate regime/central bank dependence of the countries in the sample. Over the 1972–2010 period, Taylor rule specifications do not suggest a relationship between government ideology and monetary policy as measured by the short-term nominal interest rate or the rate of monetary expansion minus GDP trend growth. Monetary policy was, however, associated with government ideology in the 1990s: short-term nominal interest rates were lower under leftwing than rightwing governments when central banks depended on the directives of the government and exchange rates were flexible. Very independent central banks, however, raised interest rates when leftwing governments were in office. We describe the historical evidence for several individual countries. [ABSTRACT FROM AUTHOR]

This paper studies utility‐maximizing monetary policy in a two‐country economy with consumer search frictions. Search frictions provide a microfoundation for incomplete exchange rate pass‐through and international deviations from the law of one price (LOP). I show that optimal interest rate policy targets deviations from the LOP and acts to mitigate the effect of search frictions. In a quantitative setting, with internationally correlated technology and preference shocks, optimal policy generates positive cross‐country correlation of nominal interest rates. [ABSTRACT FROM AUTHOR]

This paper highlights some of the theoretical and practical implications for monetary policy and exchange rates that derive specifically from the presence of a global general equilibrium factor embedded in neutral real policy rates in open economies. Using a standard two‐country Dynamic Stochastic General Equilibrium (DSGE) model, we derive a structural decomposition in which the nominal exchange rate is a function of the expected present value of future neutral real interest rate differentials plus a business cycle factor and a purchasing power parity (PPP) factor. Country‐specific "r*" shocks in general require optimal monetary policy to pass these through to the policy rate, but such shocks will also have exchange rate implications, with an expected decline in the path of the real neutral policy rate reflected in a depreciation of the nominal exchange rate. We document a novel empirical regularity between the equilibrium error in the Vector Error Correction Model (VECM) representation of the empirical Holston, Laubach, and Williams (HLW) four‐country r* model and the value of the nominal trade weighted dollar. In fact, the correlation between the dollar and the 12‐quarter lag of the HLW equilibrium error is estimated to be 0.7. Global shocks to r* under optimal policy require no exchange rate adjustment because passing though r* shocks to policy rates "does all the work" of maintaining global equilibrium. We also study a richer model with international spillovers so that in theory there can be gains to international policy cooperation. In this richer model, we obtain a similar decomposition for the nominal exchange rate, but with the added feature that r* in each country is a function of global productivity and business cycle factors even if these factors are themselves independent across countries. We argue that in practice, there could well be significant costs to central bank communication and credibility under a regime of formal policy cooperation, but that gains to policy coordination could be substantial given that r*s are correlated across countries. [ABSTRACT FROM AUTHOR]

The article examines how stocks behave when interest rates are being controlled by the government and looks particularly at the situation in Canada. The Bank of Canada's monetary policy is to use short-term interest rates, making it ideal for this research and Canada's economy is closely entwined with that of the U.S., making Canada susceptible to changes in the U.S. The article concludes that even though the authors successfully demonstrated that a money-supply function can be determined from bank credit demand functions and deposits but the authors also caution that the method may not be able to control money growth.

The 1980 Depository Institution Deregulation and Monetary Control Act (DIDMCA) mandates that Regulation Q be phased out by 1986. With deregulation of interest rate ceilings, the cost of raising capital funds for commercial banks would become more volatile and more closely related with interest rates in the money and capital markets. Thus, value-maximizing bank managers would need to be concerned not only with the internal risk, but also with the external risk in bank portfolio management decisions. Based upon the cash flow version of the capital asset pricing model, this paper analyzes the joint impact of interest rate deregulation and capital requirements on the portfolio behavior of a banking firm. [ABSTRACT FROM AUTHOR]

The article refers to a study by Robert H. Zerbst and William B. Brueggeman (Z&B) concerning discount points for mortgage loans and discusses an alternative model. The Z&B model--which compares conventional and Federal Housing Authority insured mortgages in the United States, as well as the asking and selling prices--relies on an indirect estimate of cost shifting with discount points via higher house prices. The alternative approach is a statistical test that directly estimates the proportion of points shifted and considers factors such as the expected loan to value ratio, number of points charged, and variables in the property sale.

These findings (which were not expected) were discussed with a number of finance company executives experienced in operations. They were not surprised. It was their belief that most loans cost about the same to make and service. While some customers required more effort and expense than others, they could not generally be identified by the dollar amount of loans written at a particular time. For example, a $600 loan may be made to a good present customer who wants to borrow more money or may be made to a customer because he was unable to pay off a $1000 loan completely. In the first case, little effort is required; in the second case, the $600 loan was the end product of much consultation with (and possibly chasing of) the customer. An exception, though, may be large loans--loans over $1000--which are considered different than smaller loans because they are larger than the traditional size of loans made by finance companies. [ABSTRACT FROM AUTHOR]

The purpose of this study is to update previous studies ([1], [2], [3], [4], [5], [7], [8]) using new data where possible and updated data series to resolve open issues relating to the regulatory and economic determinants of credit-card and check-credit usage, and to the impact of periods of general credit restraint on check-credit and credit-card growth. Since bank credit-card and check-credit programs are more mature than formerly, the influence of fundamental economic factors can be better isolated from temporary aberrations affecting credit-card and check-credit growth. [ABSTRACT FROM AUTHOR]

In this article I analyze if the evolution of the RON/EUR and RON/USD exchange rates, in the period 1990-2015, has been characterized by volatility or by stability. I also study the relationship between the evolution of the exchange rate of the national currency and some of the Romanian financial-monetary market indicators. The results obtained show that both the RON/EUR and RON/USD exchange rates were stable after 2004, and, therefore, they didn’t generate tensions on the financial-monetary market in Romania. The evolution of the national and international economic and political factors (the crisis, the speculations, the distrust of investors, the policy interest rate and the exchange rate policy) has influenced the behaviour of the Romanian national currency. The analysis shows that mostly the monetary market tensions have influenced the evolution of the exchange rate of the national currency rather than vice versa, because the volatility of the exchange rate has appeared after 2004, only on the short-term, not as a general trend.

The research purpose is to find out if signs of a real estate bubble are shown at the austrian real estate market right now. Lending rates are composed of different factors: the base rate is the price that the customer is willing to pay. The risk premium is given to compensate the lenders risk of full or partial failure of repayment. The inflation adjustment takes into account the impairment of money over the term of a loan. The liquidity premium increases with extension of the term of the loan. The European Central Bank influences the interest rate policy by varying the interest for money saved there by the banks. At the moment there are used negative interest rates, i.e. penalty interest. The methodology used was that recently the ECB lowered the interest rates which might cause real estate bubbles and, subsequently, banks and economic crises may follow, if interest rates were to be increased again sooner or later. There for the author studied the amount of sales and the connection to the interest rates and the interest rate policy of the banks right now. Summarizing it can be seen that in Kittsee, an Austrian area with a lot of real estate sales, as an example, 565 real estate properties were sold in the years 2005 to 2015, the median prices increased in relation to the buyers residence in Austria or non- Austrians at about 375% to 490%, this might indicate signs of change on the market. [ABSTRACT FROM AUTHOR]

One of the goals of stabilization policy is to reduce the output gap-the difference between potential and actual output-during downturns. Potential output, however, is an unobserved variable whose definition can vary. For example, some view potential output as the level of output that can be produced when employment is at the natural rate. Others use trend measures of output to measure potential. We survey some of these measures using both full-sample data (all of the data that would be available through June 2017) and real-time data (the actual data that would have been available at different points in the sample). We construct six different measures of potential: a linear trend, a quadratic trend, the Congressional Budget Office measure, and three filtered trends. We compare these measures across methods and across time. We also use the measures to compute the monetary policy prescription in a standard interest rate rule and find very little difference across methods. [ABSTRACT FROM AUTHOR]

A notable feature of the empirical research on the interest rate autonomy is that very few studies seek to determine whether the use of interest rate policy to fine-tune the exchange rate misalignments has been undermined by sterilised foreign exchange intervention. To overcome this deficiency, this study uses the open-economy Taylor rule as a policy reaction function in a standard macroeconomic model to specify the measures of independent interest rate policy reacts to the exchange rate and examines the empirical validity based on a sample of 13 selected Asia Pacific countries. Using the generalised method of moments, the findings provide some policy implications; the interest rate instrument can serve as a coordinating function to fine-tune the exchange rate misalignments for improving the macroeconomic stability and serve as an external shock absorber to avoid or mitigate impact of instability in the foreign capital market. [ABSTRACT FROM AUTHOR]

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Objective: The purpose of this study is to present a review of the negative interest rate policy of the Swiss National Bank (SNB) after the outbreak of the financial crisis, in the context of falling real interest rates. Furthermore, the article demonstrates the implications of this unconventional monetary policy for the Swiss economy as well as the financial market stability. Research Design & Methods: The study is completely based on literature research. The analysis should be interpreted as being mainly suggestive since empirical research based on a quantitative analysis was not conducted. This article examines and reviews extensive arguments and evidence of 97 scientific articles. The descriptive evidence presented has a strong focus on the situation in Switzerland. Findings: In economic literature, the discussion about transmission mechanisms of the monetary policy is conducted through several channels: the interest rate channel, the ex-change rate channel and other asset price channels. In Switzerland, the impacts of the negative interest rate policy (NIRP) implemented in 2015 can so far be felt in increasing credits, especially in mortgage claims. The net income of Swiss banks from the commission and service business fell. Moreover, the exchange rate of the Swiss Franc against the Euro could be stabilised to a certain degree. Implications & Recommendations: A negative interest rate policy has an immediate impact on short-run and long-run interest rates and on banks' interest rate margins. Currently, monetary policy is taking a turn, especially in the US. However, the leeway for higher rates in Switzerland is limited due to the interest rate differential between short-term Eurozone and Swiss money market rates. Contribution & Value Added: This article provides insights into the determinants of real interest rates and into the short-run effects of NIRP on the Swiss economy. [ABSTRACT FROM AUTHOR]

This paper reevaluates the basic prescriptions of monetary policy design in the new Keynesian paradigm through the lens of imperfect knowledge. We show that while the basic logic of monetary policy design under rational expectations continues to obtain, perfect knowledge and learning can limit the set of policies available to central banks, rendering expectations management in general more difficult. Nonetheless, the desirability of some form of price-level targeting, inducing inertia in interest-rate policy, paramount under rational expectations, is robust to the assumption of imperfect knowledge. (JEL D84, E13, E31, E52, E58) [ABSTRACT FROM AUTHOR]

The federal funds rate is one of the most important monetary policy instruments of Federal Reserve Bank of America. In this study, we analyze the effectiveness of Fed interest rate policy on different markets in the period between 1976 and 2016 through Markov regime-switching regression analysis. Results indicate that Federal fund's rate affects labor and housing markets with a few month's lag. However, the influence of Federal funds rate on inflation rate is quite limited. It is most probable that Fed employs alternative monetary instruments to regulate inflation. The most interesting results are obtained in the domain of personal savings. The interaction of personal savings and Federal funds rate is significant during both expansion and recession regimes. [ABSTRACT FROM AUTHOR]