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In this paper, the monetary conditions are observed through loans to the central government, loans to the local government, loans to non-financial associations, excess liquidity and the primary liquidity rate. The fiscal conditions are observed through total revenue, total expenditure, deficit/surplus, domestic and foreign debt. Modelling of the reflection of thus defined monetary and fiscal conditions on the Gross domestic product (GDP) per capita is observed using data from 2002 to 2018. With clustering, the established problem required the creation of 4 independent models. The models were created by using fuzzy logic due to incongruity, class limits and the subsequent uncertainty and truth bias that may have appeared in the established problem. The results of research conducted in this way point that the reflection of monetary and fiscal conditions on GDP per capita should be observed through three individual and one main model. Such approach indicates an interrelationship of individual variables with foreign debt, deficit/surplus, total expenditure and finally GDP per capita. These models can serve the monetary and fiscal authorities in the analysis and modelling of an effective interaction of monetary and fiscal conditions aimed at increasing GDP per capita.

The monetary easing of the past few years by the world’s major central banks through conventional and unconventional policies coincided with the longest and broadest commodity price boom since the Second World War. And not surprisingly, the impending normalization of monetary conditions has created expectations of a likely reversal in commodity price trends. Based on a reduced form, price-determination model which accounts for all quantifiable sectoral and macroeconomic fundamentals, this note finds that the effect of short-term interest rates on metal prices is mixed and modest. But, changes in longer term rates have a positive and highly significant impact. The note also concludes that metal prices respond (in that order) to industrial production, input prices, US dollar movements and physical stocks of metals.

This paper investigates the relation between monetary conditions and the excess returns arising from an investment strategy that con- sists of borrowing low-interest rate currencies and investing in currencies with high interest rates, so-called "carry trade". The results indicate that carry trade average excess return, Sharpe ratio and 5% quantile differ substantially across expansive and restrictive conventional mone- tary policy before the onset of the recent financial crisis. By contrast, the considered parameters are not affected by unconventional monetary policy during the financial crisis.

Armenias economic growth remained resilient in 2014. Output expansion slowed to 3.4 percent in 2014, relative to 3.5 percent in the previous year. On the supply side, while services particularly transport and telecoms), agriculture, and manufacturing performed well, construction, mining, and energy made negative contributions to output growth. On the demand side, net exports were the main contributor to growth, offsetting weak private consumption and negative private investment. However, by the last quarter, Russias economic slowdown and the steep depreciation of the ruble began to depress remittances, FDI inflows, and exports. Few jobs were created during the year, and the unemployment rate reached to 17.6 percent in 2014. A weak labor market, combined with slower emigration and return migration from Russia, are likely to have undermined growth in the incomes of the poor. Declining remittances and higher inflation in the last few months of 2014 reinforced these trends. Poverty at US$2.5/day was 30.2 percent in 2014, still above the levels recorded in the period leading up to the 2008 financial crisis. Fiscal policy continued to be prudent throughout the year, and monetary tightening responded to the currency depreciation. Developments in Russia will adversely affect economic growth in 2015, underscoring the needfor Armenia to press ahead with structural reforms.

In 2014, economic growth slowed as it began to adjust to unsustainable economic imbalances. Real GDP growth softened to 7 percent in the first 9 months, from 12.8 percent in the previous year. Despite strong mining production growth of 26 percent, the growth of the non-mining sector of the economy dropped to 2 percent in the third quarter from 17.4 percent a year ago. Investment sharply fell amidst declining FDI and weakening business prospects. Consumption remains relatively strong but is also gradually softening. The growth effect from stimulus measures of the last year is also wearing off in 2014 as large liquidity support from the central bank cannot be sustained in the wake of high inflation and external vulnerabilities. The current account deficit is narrowing significantly to around 11 percent of GDP from almost 30 percent in the previous three years, due to import contraction over 16 percent and stronger copper exports. However, a significant external financing gap continues amidst declining foreign investment, reducing internal reserves to less than three months import cover. Inflation remains in double digits after a strong credit boom in 2014 and continuous currency depreciation. Economic growth is likely to continue to soften in 2015 as the economy remains under pressure from the external imbalance and high inflation. To help achieve the goal of the new Solutions-oriented Government to overcome economic challenges and build a sound economic management system, the following policy actions are recommended to be considered in the economic policy framework: (1) Consolidate the off-budget spending made through the DBM into the budget; (2) prepare a credible and realistic fiscal consolidation plan to reduce the deficit; (3) monetary policy should be tightened; (4) further quasi-fiscal activities need to be avoided; and (5) the exchange rate should be left flexible.

This dissertation consists of three self-contained chapters on monetary policy and fiscal policy. All three papers concern the effects of monetary and fiscal policy in the presence of financial frictions. In the first paper this friction is a zero lower bound on the nominal interest rate, which can leave monetary policymaker unable to stimulate the economy through the traditional interest rate channel. In the two last papers, the friction is limited asset market participation of households, in the sense that a fraction of households have no access to asset markets and thus consume their disposable income every period.

To determine the relative importance of both the domestic and external influences on monetary policy formulation, this paper constructs a broad monetary conditions index for Nigeria. It brings together the three key channels of monetary transmission, namely interest rate, exchange rate and credit channels. The result gives dominance to exchange rate channel, followed by credit channel and interest rate channel. The resultant monetary conditions index traces fairly well the policy direction of the Central Bank of Nigeria for the studied period, hence can serve as an adequate gauge of monetary policy stance of the Bank.

The Malaysian economy maintained a vigorous pace in the first nine months of 2012 despite external headwinds. Continuing a trend in the past two years, Malaysia's stronger-than-expected Gross Domestic Product, or GDP growth in the first nine months of 2012 was driven by rapid expansion of domestic demand while external demand (and export-oriented industries) stagnated due to continuing global uncertainty. Malaysia's low participation of women in labor markets is linked to a pattern whereby women do not return to work after marriage and childbearing. Education alone is not sufficient to close gender gaps as social norms and formal institutions continue to affect the choices of all women. In the long-term, norms need to evolve for gender gaps to be bridged; in the meantime measures can be put in place to help men and women balance responsibilities. Changing prevailing social norms takes time. In the medium-term, supportive measures at all stages of the life-cycle can be put in place, ranging from flexi-work arrangements and expanded childcare options, to incentives for more female participation in 'non-female' educational fields and job types. While current initiatives to leverage on women's talent are laudable, other policy options must be explored, evaluated, and tailored, to enable Malaysian women to fully contribute to Malaysia's transformation towards a high-income, inclusive and sustainable economy.

Since 2004 (Ethiopian Fiscal Year (EFY) 1997), Ethiopia has experienced strong and generally broad-based real economic growth of around 10.6 percent on average between then and 2011. Growth over the last nine years was far beyond the growth rates recorded in aggregate terms for Sub-Saharan Africa (SSA), which on average only reached 5.2 percent, less than half of Ethiopia's average real gross domestic product (GDP) growth rate during that period. Inspired by the East Asian experiences for a comparison of selected indicators and policies of Ethiopia and China/Korea), growth was induced through a mix of factors including agricultural modernization, the development of new export sectors, strong global commodity demand, and government-led development investments. The initial double digits growth rates have now manifested slightly lower but remain at high single-digit levels. The economy is expected to stabilize at around seven to eight percent in 2012, largely owing to improved performance in the agriculture sector. GDP growth is likely to stay around that margin up until 2016 (EFY 2008) driven by rising foreign investment and exports (Economist Intelligence Unit 2012). High inflation persists, but is on a slightly decreasing trend. Economic growth brought with it positive trends in reducing poverty, in both urban and rural areas. Ethiopia follows a strategy of increasing exports to facilitate growth. This is appropriate given the currently limited size of its domestic market and it is consistent with the development experience of some of the recently successful countries, particularly in East Asia. Export of goods growth is to a good extent driven by volume growth across a variety of product groups, which indicates that this growth is a result of recent efforts to increase and diversify the export base. Overall export and import developments result in a significantly increased trade deficit by 43 percent, up from US$5.5 billion in 2010/11 to US$7.9 billion.

Despite an unfavourable global economy, economic growth in Bangladesh is projected at close to 6 percent in fiscal 2013 (FY13). Adverse external demand and domestic supply constraints continue to be a drag on growth. Shortfalls in exports and investments due to a possible protracted crisis in the euro area and internal supply constraints may underpin the moderation of growth. Investment targets of the medium term budget framework 2013 to 2017 face major obstacles in shortage of electricity and gas supplies, and poorly functioning roads and ports. One positive prospect on the investment front is the increase in foreign direct investment in FY12, which surpassed the US$ 1 billion for the second time in Bangladesh's history. Fiscal policy is back on track. Fiscal performance in FY12 was favourable, notwithstanding increasing subsidies. The overall budget deficit in FY12 is estimated at 4.5 percent of Gross Domestic Product (GDP). Domestic financing of the deficit declined to 3.2 percent of GDP, from 3.5 percent in FY11. Lower government borrowing from the banking system in the second half of FY12 was a welcome reversal from worrying trends in the first half of the year. The FY13 budget deficit target 5 percent of GDP is modest, though higher than the estimated 4.5 percent of FY12, and is likely to be undershot primarily because of a shortfall in the implementation of the ambitious Tk 550 billion annual development programs, by now a familiar pattern. However, the financing of the deficit may be a challenge with a projected US$2.2 billion net external financing need, substantially more than the $1.4 billion of the revised FY12 budget. The rest of the deficit is projected to be financed from domestic sources, with a still heavy 69 percent reliance on bank borrowing. Bangladesh's economic outlook is subject to several near-term risks. Possible intensification of the euro area crisis may deepen Bangladesh's export slump of the last six months; escalation of global food prices may reverse the recent decline in food inflation; global oil price shock will place the balance of payments under pressure again and shrink fiscal space; banks are susceptible to credit and market risk and the global economic vulnerabilities; and increased political instability and labour unrest may depress investments further.

The Malaysian economy grew robustly in 2011, outperforming forecasts. Growth was driven by domestic demand. Public consumption picked up more than expected toward the end of the year and fixed investment was also buoyant on higher investments by public and private companies. Private consumption spending remained strong, sustained by solid consumer credit, civil service bonus payments, and firm commodity prices benefiting smallholders. Inventories were a drag on growth as post- financial crisis restocking was completed. There is momentum to the reform agenda, but implementation could be accelerated. The government's transformation programs registered notable progress, but the challenge now is to go beyond quick wins and accelerate the implementation of more difficult, but critical, structural reforms that lie at the core of transforming the economy into a high-income one. Implementation can be assisted by increasing the coordination of related reform efforts (such as safety nets and education), building capacity within the civil service to lead reforms, and working towards consensus in key areas such as educational reform, subsidy rationalization and broadening the tax base.

We analyze monetary conditions in US asset markets — corporate equity, real estate, Treasury bond and corporate & foreign bond — from a market specific perspective, proposing the concept of market leverage. Market leverage measures the average leverage of all asset holders in a particular asset market. The concept builds on an accounting based network that links balance sheet leverages of asset holders to their corresponding shares of ownership. Our empirical analysis yields the following results. Firstly, market specific monetary conditions can differ considerably among asset markets. Secondly, market specific monetary conditions are positively related to asset prices. Thirdly, US asset markets have experienced a loosening in market specific monetary conditions in the last decades. Fourthly, the loosening of market specific monetary conditions explains long-term increases in US asset prices. Fifthly, the recent convergence of market specific monetary conditions of real asset markets towards those of financial asset markets implies a rise in upside risk to future US asset price inflation.

The Philippines economy posted robust growth in early 2010, in part due to large one-off factors. As did many countries in the region, the Philippines benefited from a strong rebound in global trade. Manufacturing and investment activity expanded briskly as a result. Private consumption continued to expand, as consumer confidence improved. Growth also benefited from election-related spending. Expansionary (and now pro-cyclical) fiscal policy continued to support growth. Despite a withdrawal of liquidity-enhancing measures and a stronger peso, a closing output gap meant that monetary policy remained accommodative. A World Bank study of Philippines migration pattern during the global recession reveals that deployment of overseas foreign workers (OFWs) actually accelerated during the crisis. Partly this reflected the fact that the top OFW destinations were not as affected as the rest of the world. The most affected OFWs were males, production workers (especially construction workers) and new hires. By contrast, females, services workers, seafarers and rehires proved resilient to the crisis or even benefited from it. Globally, less tolerance towards weak public finances is expected, raising the need to introduce a credible medium-term fiscal consolidation plan for the Philippines. Running a pro-cyclical fiscal policy with relatively high debt and limited fiscal space-as undertaken in the first-half of 2010-raises risks and should be reverted. Credibility towards such a goal could be achieved, for example, by designing a comprehensive multi-year reform package. As the output gap closes, the accommodative monetary policy introduced in 2008 would need to be gradually unwound, starting by reaching a broadly neutral stance in 2010. An increase in policy rates currently negative or slightly positive could achieve such a goal.

The global crisis is now in the rear view mirror and world growth is being restored. In sharp contrast with past episodes of global turmoil, this time the recovery is led by the periphery, specifically by the larger and more dynamic emerging markets (Brazil, China, India, South Korea, Malaysia, Philippines, and Thailand). For this group of emerging markets (EMs), the contraction in economic activity was much smaller than that of rich countries, the recovery started earlier, and the rebound has been much steeper. Latin America and the Caribbean (LAC) are second among emerging regions, after Asia, in the strength of the recovery. The first part of the report focuses on macroeconomic and financial aspects, emphasizing the outlook going forward. Finally, the second part examines some aspects of the adjustment in labor markets during this crisis in comparison to previous ones.

From 1884 to 1914, the Privileged National Bank of the Kingdom of Serbia managed to establish and maintain relatively stable monetary conditions. On the one hand, its interest rates and lending policy contributed to the lowering and stabilization of exceptionally high market interest rates, and on the other, the National Bank managed to preserve relative stability of the domestic currency. The conversion of paper money to gold or silver was ensured at all times, except in two instances – at the outbreak of the Balkan Wars and World War I. The National Bank could not eliminate agio, but did the best it could to ease its fluctuations. Agio declined as a result of a sharp turnabout in public finances never again to reach the level prior to 1903. The effectiveness of the National Bank in achieving relatively stable monetary conditions is particularly important in light of the circumstances prevailing at the time: wars and economic crises, budget deficits and internal political upheavals. It would be right to say that monetary conditions were largely shaped by the state of public finances. As budget expenditures outstripped the revenues, the government was forced to look for additional funds to cover the deficit by borrowing either abroad or locally, primarily from the National Bank. This had a direct negative effect on the level of gold reserves and indirectly affected the stability of the domestic currency and Bank lending activity. Once the public finances were put in order in 1903 and capital began to flow in from abroad, the National Bank was able to implement measures aimed at stabilisation of the dinar and to stimulate lending activity with more success throughout World War I.

Between 1995 and 2005, the German economy has experienced a phase of weak economic growth. We analyze whether this weak growth performance can be attributed to the stance of monetary conditions during that period. We show that the real effective exchange rate did have almost no dampening effects on growth. On the contrary, the introduction of the euro and the single monetary policy for the euro area seems to have contributed significantly to the low trend growth rate in Germany between 1999 and 2005.

Monetary conditions and economic activity in the euro area. With a VAR model, we show that the economies of the euro area are strongly dependent on the monetary conditions (short term interest rate, exchange rate). In the long-run, the industrial activity of the area enters in a co-integrating relation with the euro-dollar real exchange rate, the euribor and the money supply M3 in real terms. In the short-run, the influence of monetary policy shocks and exchange rate shocks determines the evolution of industrial production : it reaches its full effect after about one year ; however, the influence of monetary policy through the rate of intervention of the BCE is three times higher than that of exchange rate., Grâce à un modèle VAR, nous montrons que les économies de la zone euro sont fortement dépendantes des conditions monétaires (taux d'intérêt directeur, taux de change). A long terme, l'activité industrielle de la zone entre dans une relation de co-intégration avec le taux de change réel euro-dollar, l'euribor et la masse monétaire M3 en termes réels. A court terme, l'influence des chocs de politique monétaire et de taux de change est déterminante dans l'évolution de la production industrielle : elle atteint son plein effet après environ un an ; toutefois, l'influence de la politique monétaire à travers le taux d'intervention de la BCE est trois fois plus élevée que celle du taux de change.

This paper reviews the usefulness of monetary conditions in the euro area as leading indicators for aggregate demand conditions. Monetary conditions are measured with the MCI concept proposed by the Bank of Canada, and with the yield spread. A central result is that causality runs in both ways between monetary and aggregate demand conditions. The endogeneity of monetary conditions raises important implications for its role as a predictor of aggregate demand. It is shown that the information content of monetary conditions depends on the source of business cycle fluctuations and on the response of the central bank to those fluctuations.

The monetary conditions index is a composite index of interest and exchange rates frequently used by central banks, the International Monetary Fund, and the Organisation for Economic Cooperation and Development. This paper considers the benefits and weaknesses of the monetary conditions index in the light of large macroeconometric models. It follows that the impact of the exchange rate on gross domestic product relative to the impact of the short-term interest rate is substantially lower under a monetary union. For most countries, including a long-term interest rate only affects the level of the monetary conditions index and not its turning points.