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This article examines the political economy of central banking in Turkey in the aftermath of the global financial crisis. The macroprudential turn led by the Turkish central bank not only created a political backlash from within the AKP government but also revealed the divergent preferences of real and financial sector actors in the Turkish economy. Using the policy regimes and policy feedback framework with a qualitative data analysis methodology, this article argues that the interplay between the contextualised material, ideational, structural and institutional forces, the strategies of leading politicians and how the stakeholders perceived and evaluated the new policy framework had a critical role in shaping the legitimacy, coherence and durability of the macroprudential policy regime in Turkey. [ABSTRACT FROM AUTHOR]

This paper examines the monetary policy constraints facing economies on a fixed peg or managed float regime, contrasting the Mundell-Fleming Trilemma view against the Compensation view commonly found at central banks. While the former holds that foreign exchange inflows and outflows affect the domestic money base and constrain monetary policy under non-floating regimes unless capital controls are adopted, the latter purports that endogenous sterilisation of foreign exchange flows invalidates this trade-off. The predictions of both theories are empirically evaluated for five East Asian economies using central bank balance sheets, vector error correction models and impulse response functions. The findings indicate that the dynamics for the economies studied correspond more closely to the Compensation view than the Trilemma view, suggesting that it is a sustained loss of foreign exchange reserves, not the adoption of a non-floating exchange rate regime, that imposes a relevant constraint on autonomy. [ABSTRACT FROM AUTHOR]

This article investigates the existence of a long-run money demand relation for a panel data consisting of 13 OECD countries. The analysis is based on the most recent data. The existence of a long-run money demand relation is tested with two new meta-analytic panel cointegrating rank tests which are robust to cross-sectional dependence. Cross-sectional dependency in the data generating process is modelled by unobserved common factors. The observed data are decomposed into idiosyncratic and common components, and these two components are analysed separately to find out the driving forces of the long-run stationary relationship. The evidence shows that the long-run money demand relation is driven by the cross-unit cointegration. Finally, the long-run relation is estimated by taking the common factors into account. [ABSTRACT FROM AUTHOR]

The study examined the efficiency of monetary policy in Nigeria for the period 1980-2015 based on annual data sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin (various issues) and World Bank Data Base. The result obtained through DEA show that monetary policy in Nigeria requires some allowable adjustments before efficiency can be achieved and thus, impact on inclusive growth. The result of SVAR framework indicate that the shock from money supply and financial openness substantially impact on inclusive growth. The study therefore recommends that government should adopt an efficient monetary policy instruments that would make monetary policy to reach optimum and impact significantly on the economy. [ABSTRACT FROM AUTHOR]

The article offers the author's view on the effect of overburdening on the independence and image of Central Banks in Europe. He mentions their reputation during the Great Moderation which received independence from political influence. He also notes that the period saw a decline in inflation and the increase in employment.

The envisaged 'completion' of European Economic and Monetary Union (EMU) through the Banking Union is one of the most significant projects of European integration since the Maastricht Treaty. This article departs by emphasizing that the European Central Bank (ECB) is actively engaging in the design of this objective. ECB's engagement in different parts of the process as well as its role in the current state of core pillars of the Banking Union is varying. The ECB received a prominent role on micro prudential supervision in context of the Single Supervisory Mechanism (SSM), gained some structural power on macro prudential supervision and has some influence on the Single Resolution Mechanism (SRM). In order to explain this variance, the qualitative research approach is based on the analysis of comprehensive data such as legal opinions of the ECB, speeches of central bank officials, press articles, legal documents, institutional documents and expert interviews. The analysis shows that although the ECB acted politically in the making of the Banking Union, its role is paradoxically bound between the credence to sustain its independent mandate and avoiding overstretching its relatively narrow remit. My findings suggest that ECB's bounded supranational activism helps explaining both ECB's role and the current state of the design of a European Banking Union. [ABSTRACT FROM AUTHOR]

The author discusses efficacy rules for monetary policy in relation to the political economy, their role in the 2008-9 global financial crisis, and the tools to determine sound monetary policy. Topics include the support for rules-based monetary policy, monetary-policy rules for central banks like the k-percent growth rule, monetary base rule, and the radical rules like free banking and nominal income targeting, and the rationale why the rule of law should prevail over economic control.

We investigate the effect of economic globalization on domestic inflation in twenty-one new emerging economies over the period 1990–2009. The empirical analysis using dynamic panel data models shows that the effect of domestic and global economic slacks on domestic inflation in the new emerging economies has changed significantly since the end of the 1990s. Before the end of the 1990s, the domestic economic slack played a predominant role in driving domestic inflation. After the year 2000, however, the global economic slack played a significant and more important role in affecting domestic inflation. This finding implies that the prescription that central banks should specifically react to developments in global output is justified for the new emerging economies over the most recent decade. [ABSTRACT FROM AUTHOR]

The article focuses on Islamic finance in Dubai, United Arab Emirates (UAE) and Oman 2014. Topics include financial regulation in Islamic finance, the practice of riba or interest, and the development of the Islamic banking system in Oman. Information is provided on the Oman Central Bank's (OCB) Islamic banking regulatory framework proposals.

The article discusses the economic history and theory of central banks and monetary policy, with reference to the paper "Central Bank Independence: Can it survive a crisis?" by Forrest Capie and Geoffrey Wood. Topics discussed include the independence of central banks, the ability of central banks to react to crisis without government intervention, and the role of central bank mandates in crisis management.

The article discusses the theory and practice of central bank independence, with a focus on the independence process of the Reserve Bank of New Zealand. Topics discussed include background on the history of the Reserve Bank of New Zealand, the history of monetary policy in New Zealand, and the relationship between national economies and central banks.

Between 2002 and 2006, the Federal Reserve set interest rates significantly below the rates suggested by well-known monetary policy rules. There is a growing body of research suggesting that this helped fuel an excess of liquidity in the U.S. that contributed to the 2008 worldwide financial crash. It is less well known that a number of other central banks also lowered interest rates during this period. An important question, then, is what role the Federal Reserve played in influencing other central banks to alter their own monetary policies, which could have magnified the Fed's actions in creating global liquidity. This paper addresses the issue by showing how spillovers in central bank behavior occur in theoretical rational expectations models. It then establishes empirically how U.S. monetary policy actions affect the actions of other major central banks, particularly in terms of interest rates and currency interventions. The models and data suggest that the U.S. lowering its policy rate, either in general or in reference to a monetary policy rule, influences other central banks to lower their own policy rates and intervene in currency markets, even when controlling for worldwide macroeconomic trends. It thus appears that U.S. actions were a factor in the worldwide lowering of interest rates and the increase in currency reserves in the early 2000s that may have contributed to the subsequent global liquidity boom. [ABSTRACT FROM AUTHOR]

Copyright of Ensayos Economicos is the property of Banco Central de la Republica Argentina and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This article discusses the monetary policies of the Banco Central Europeo (European Central Bank), especially the decision-making with regards to inflation and economic growth. The authors comment on the perceived asymmetrical reactions of the BCE during the period 1999-2008. Particular focus is given to the policy known as Taylor's rule utilized by the BCE.

In the United States and Europe, central banks have essentially been the only policymaking entities consistently willing and able to take bold measures to deal with an unusually complex set of national, regional, and global economic and financial challenges since the onset of the Great Recession and financial crisis. The author advocates for other agencies, in both the public and private sectors, to urgently work in conjunction with central bank policies. He states that it is critical that policymakers, business leaders, investors, and researchers alike understand better why so many unthinkable events have become facts, why the outlook remains "unusually uncertain," and what changes are needed to limit the risks of further disruptions and bad surprises down the road. Central banks may find themselves facing one of two extremes: complementing policies by other agencies that put the global economy back on the path of high sustained growth and ample job creation or cleaning up in the midst of a global recession, forced deleveraging, and disorderly debt deflation. [ABSTRACT FROM AUTHOR]

This paper integrates the Taylor reaction function literature with the literature on central bank independence (CBI). The central bank's policy reaction function describes its behaviors, which measures the practical CBI, as opposed to the legal CBI measured by CBI indices. By analyzing the relationship between various legal CBI indices and the central banks' reactions to inflation for 18 OECD countries, we find that the difference of behaviors among central banks is consistent with the economic measure of independence, which measures how easy it is for the government to finance its deficits by direct access to credit from the central bank. [ABSTRACT FROM AUTHOR]

The article explores proposals by the author to aid in dealing with financial crises, with a focus on historical monetary policy lessons learned by Great Britain from the 19th century. The author refers to the British businessman Walter Bagehot's advice on bank reform for the Bank of England in 1873 after the country's financial crisis of 1886, in his book ''Lombard Street: A Description of the Money Market.'' The author contends that Bagehot's proposals for economic reform were not the best remedy, while asserting that a better solution was to substitute a decentralized banking system such as that from Scotland for the centralized banking system of England.

The article focuses on the role of intervention by modern central banks in credit markets, especially since the global financial crisis of 2008. The author explores the response by the U.S. Federal government during the crisis, including the sales of U.S. Treasure securities from the U.S. Federal Reserve's portfolio and the increase in the supply of excess monetary reserves through the expansion of private assets. The author emphasizes the importance of the building of an independent and modern Federal Reserve. The author contends that the Federal Reserve's power to use its asset portfolio in the intervention of credit markets poses as a threat to monetary policy independence.

The article focuses on the economic aspects and changes that have occurred to central banks since the global financial crisis of 2008. The economic aspects of consumer and government spending relating to business investments are explored. The author refers to American economist Paul Krugman's commentary about the interchangeability between government and consumer spending and the need to increase economic demand to reflate the economy. The author further examines Krugman's referral to the existence of a liquidity trap when an economy's zero nominal interest rate is not sufficient to restore full employment. The negative aspects of the delegation of fiscal authority to central banks are discussed by the author.

The aim of the paper is to emphasize the importance of the central bank's alternative strategies for macroeconomic equilibrium. Using a constrained maximization process founded on a behavioural equation, we underscore the relevance, for monetary policy, of the assumptions adopted by policymakers regarding how the economic system works. In particular, under a flexible exchange rate regime, the relevant hypotheses are those concerning the supply curve. Under a fixed exchange rate regime the relevant assumptions are those related to the maintenance of the currency agreements and to the internal sustainability of an interest rate setting policy. We demonstrate that these hypotheses define the objective pursued and the strategy followed. Furthermore, if they do not coincide with the actual characteristics of the market, the adjustment dynamics of aggregate income and inflation do not allow convergence toward equilibrium. We use the tools of New Consensus Macroeconomics to discuss the implications of the model and to offer an enhanced analytical framework for teaching intermediate macroeconomics without necessarily adopting the mainstream hypotheses. [ABSTRACT FROM PUBLISHER]

The article discusses the financial crisis in the U.S. and elsewhere in the early 21st century. The author argues that central banks can provide price stability that, in addition to the author's call for wise economic policies and sensible governmental regulations, will prevent future economic crises. The author discusses his views on the macroeconomic aspects of price collapses, growth stagnation, and recession. The article also examines capitalization and liquidity standards as well as the so-called the "Greenspan put," advocated by former U.S. Federal Reserve chairman Alan Greenspan.

In this paper we explore lessons from the global liquidity crisis pertaining to the prudential supervision role of central bank in an open economy. The crisis validates the need for external debt management policy in emerging markets. Hoarding international reserves (IR) is a potent self-insurance mechanism. However, it is associated with relatively high costs and is also less efficient in absence of assertive external debt management policies. In the presence of congestion externalities associated with deleveraging, optimal external borrowing-tax-cum-IR-hoarding-subsidy reduces the cost as well as the scale of hoarding IR. [ABSTRACT FROM AUTHOR]

This paper studies optimal monetary policy in a model where aggregate fluctuations are driven by the private sector's uncertainty about the economy's fundamentals. Information on aggregate productivity is dispersed across agents and there are two aggregate shocks: a standard productivity shock and a “noise shock” affecting public beliefs about aggregate productivity. Neither the central bank nor individual agents can distinguish the two shocks when they are realized. Despite the lack of superior information, monetary policy can affect the economy's relative response to the two shocks. As time passes, better information on past fundamentals becomes available. The central bank can then adopt a backward-looking policy rule, based on more precise information about past shocks. By announcing its response to future information, the central bank can influence the expected real interest rate faced by forward-looking consumers with different beliefs and thus affect the equilibrium allocation. If the announced future response is sufficiently aggressive, the central bank can completely eliminate the effect of noise shocks. However, this policy is typically suboptimal, as it leads to an excessively compressed distribution of relative prices. The optimal monetary policy balances the benefits of aggregate stabilization with the costs in terms of cross-sectional efficiency. [ABSTRACT FROM AUTHOR]

This paper offers a new approach that estimates the response of interest rates to inflation and the output gap at various points (quantiles) on the conditional distribution of interest rates. This offers an improvement on empirical estimates conducted only at the mean and also allows us to test the propositions that policy shows greater aggression to inflation in the reaction function in terms of a greater response coefficient as interest rates reach low levels, and increasing aggression as the lower bound is approached. We find support for the Taylor principle, a more aggressive response to inflation than under a Taylor rule, but no detectable evidence of increasing aggression as the zero lower bound is approached in the US and Japan. [ABSTRACT FROM AUTHOR]

Regulators, commercial and investment banks, hedge funds and rating agencies have all borne some blame for the current global financial crisis, but could central banks have done more? It is argued in the lecture that in a number of ways central banks should have paid more attention to asset bubbles, which have high output costs. Asset prices, especially housing prices, should be identified as an explicit factor in the consideration of policy. More generally, central banks should adopt policies that ‘lean against the wind’. [ABSTRACT FROM AUTHOR]

Copyright of @tic.revista d'innovació educativa is the property of @Tic. Revista D'Innovacio Educativa i Tics and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

There is growing evidence that the empirical Phillips curve within the United States has changed significantly since the early 1980s. In particular, inflation persistence has declined sharply. This paper demonstrates that this decline is consistent with a standard dynamic New Keynesian (DNK) model in which: (i) the variability of technology shocks has declined and (ii) the central bank more aggressively responds to inflation. [ABSTRACT FROM AUTHOR]

We estimate underlying structural macroeconomic policy objectives of three of the earliest explicit inflation targeters within the context of a small open economy dynamic stochastic general equilibrium model. We assume central banks set policy optimally, such that we can reverse engineer policy objectives from observed time series data. Joint tests of the posterior distributions of these policy preference parameters suggest that the central banks are very similar in their overall objective. None of the central banks show a concern for stabilizing the real exchange rate. All three central banks share a concern for minimizing the volatility in the change in the nominal interest rate. We also show that the resulting optimal policy rule responds to exchange rate movements, even in the case where the central banks do not explicitly care about exchange rate stabilization. This result is also corroborated by results from an alternative simple-rule characterization and estimation of central bank behavior. These last two findings point to the pitfalls of making inferences, from the level of ad hoc simple rules, about what central banks may care about. [ABSTRACT FROM AUTHOR]

We propose a flexible majority rule for central-bank committees where the size of the majority depends monotonically on the change in interest rate within a particular time frame. Small changes in the interest rate require a small share, while larger changes require a larger share of supporting votes. We show that flexible majority rules are superior to simple majority rules. [ABSTRACT FROM AUTHOR]

This article discusses the financial impact of the fact that petroleum sales are denominated in U.S. dollars. The use of petrodollars in the global economy is presented as a prop for the continued international investment in U.S. government debt. This has led to the development of significant cash reserves and sovereign wealth funds held by countries in the Gulf Cooperation Council Oil Exporting countries. Issues of inflation caused by the development of significant reserves during a period when the U.S. dollar is declining and the euro appears poised to develop into a global currency are discussed. The potential for a change from the dollar to the euro could instigate volatility in global markets.

Changes in formal and informal central bank independence (CBI) in France, Italy and the United Kingdom in the period from the mid-1970s to the 1990s are examined; the major changes occurred in the 1990s, after the disinflations of the 1980s. Broad trends in the informal independence of central banks (CBs), defined as the ability to pursue price stability regardless of the government's preferences, are identified on the basis of a monetary policy narrative and an analysis of a set of qualitative determinants of informal independence. The most important determinants are the social/political acceptance that monetary policy is the sphere of the CB, the existence of anti-inflationary commitments in the form of intermediate targets for monetary policy, the degree of social consensus on the means and ends of macroeconomic policy, and the relative technical expertise of the CB. These broad trends help to explain some of the inflation experience of the 1980s and 1990s, which cannot be understood in terms of changes to formal CBI. [ABSTRACT FROM AUTHOR]

Recent models with spatial separation and limited communication suggest that the Friedman rule may not be optimal. This is important in light of the disparity between theory and practice concerning optimal monetary policy. We take a close look at these models and show that intergenerational transfers are key to the suboptimality of the Friedman rule. The Friedman rule is a necessary condition for achieving the efficient allocation in equilibrium. We also show that the Friedman rule is chosen whenever agents can implement mutually beneficial arrangements. [ABSTRACT FROM AUTHOR]

The paper generalizes the Taylor principle—the proposition that central banks can stabilize the macroeconomy by raising their interest rate instrument more than one-for-one in response to higher inflation—to an environment in which reaction coefficients in the monetary policy rule change regime, evolving according to a Markov process. We derive a long-run Taylor principle which delivers unique bounded equilibria in two standard models. Policy can satisfy the Taylor principle in the long run, even while deviating from it substantially for brief periods or modestly for prolonged periods. Macroeconomic volatility can be higher in periods when the Taylor principle is not satisfied, not because of indeterminacy, but because monetary policy amplifies the impacts of fundamental shocks. Regime change alters the qualitative and quantitative predictions of a conventional new Keynesian model, yielding fresh interpretations of existing empirical work. (JEL E31, E43, E52) [ABSTRACT FROM AUTHOR]

The Rogoff proposition (Quarterly Journal of Economics, 100 (1985), pp. 1169–90) that it is socially optimal to delegate monetary policy to a central banker that is more inflation-averse than society has been widely accepted and implemented in practice. However, there is a literature that argues that, if there is an inflation-averse monopoly union in the economy, it is optimal to delegate monetary policy to an ‘ultra-liberal’ central banker, i. e., a central banker that is interested only in output. In this paper, we examine whether introducing wage indexing into the latter models has any effect on the optimal degree of central bank conservativeness and find that, once a monopoly-type labour union is introduced, wage indexing does not matter for the determination of the optimal degree of conservativeness of the monetary authority. [ABSTRACT FROM AUTHOR]

I first review the background to the adoption of an inflation target in 1992 and the subsequent development of the regime, in particular the delegation of operational responsibility for monetary policy to the Bank of England in 1997 and the associated institutional framework. I then go on to explain some aspects of the way the MPC formulates and conducts policy at the Bank, relating it to some of the burgeoning literature on inflation targeting. I next review some aspects of performance since the Bank's independence. I conclude with a discussion of the topical question of how monetary policy should respond to asset price booms and high rates of debt accumulation. [ABSTRACT FROM AUTHOR]

This article stresses the role of the central bank when discussing the response of the exchange rate to net capital flows in selected East Asian countries. We argue that the priority of central banks is the inflation rate, but this priority sometimes becomes obscured by other factors, such as the sources of inflation and economic competitiveness. Low inflation may result from strong productivity in a boom or from weak demand in a recession. Similarly, high inflation may result from strong demand or from a fiscally irresponsible government. Capital inflows would be expected in the former case and outflows would be anticipated in the latter case. The extent of the intervention of central banks and the resulting responses of the exchange rate will therefore vary based on the circumstances. The detailed empirics conducted in this article for selected Asian economies broadly confirm these hypotheses. [ABSTRACT FROM AUTHOR]

The article discusses monetary policy in Peru and its use of the United States dollar as its standard. The author chronicles Peru's adoption of the dollar as a policy standard in the 1970s and the gradual decline of the dollar as the standard into the late 1990s. The author also discusses various issues, including inflation and the role of central banks.

El artículo examina los costos de la política monetaria. Se identifica los gastos de funcionamiento, gastos cuasifiscales y gastos propios, asociados con los bancos centrales. Se clasifica los gastos de edificios y teléfonos como gastos operacionales. Los gastos cuasifiscales están asociados con incentivos explícitos al comercio externo, como la financiación de exportaciones. El artículo discute los tipos de gastos desde una perspectiva de contabilidad.

El artículo habla del rol de las autoridades monetarias y cómo manejan las crisis financieras. Desde la gran depresión económica de los Estados Unidos durante los años treinta, se considera el banco central como prestamista de última instancia. El artículo analiza el rol del Banco de México cuando ocurrió la crisis financiera de 1994 y los varios elementos de incertidumbre.