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This study examines the impact of inflation and money supply on dollarization. Especially in recent years, the rapid rise of the exchange rate and inflation in Türkiye has put the phenomenon of dollarization back on the agenda. The study covers the period 2012Q4-2023Q4. The study first applies the Fourier ADL cointegration test, which allows for soft breaks. As a result of the test, it was found that the variables have a long run relationship. In the short run, only budget revenue has a positive effect on dollarization. In the long run, the exchange rate, exports, money supply, and deposit rates have a positive effect, while inflation has a negative effect. The study also applied the Fourier-Toda-Yamamoto causality test. As a result of the test, bidirectional causality was found between exchange rate, inflation and money supply variables and dollarization. The striking result of the study is that inflation has a negative impact on dollarization. This result, which is consistent with some studies in the literature, is attributed to the money supply. Although the demand for foreign exchange increases because the money supply is higher than inflation, the dollarization index decreases. This explanation can explain the negative relationship.

In order to compare the effectiveness of China's price- and quantity-based monetary policy tools over time, we develop a structural vector autoregressive model with time-varying parameter and factor augmentation (TVP-FA-S-VAR model) to analyze the response of output gap to monetary policy shocks. We find that price-based regulation becomes increasingly effective as China's interest rate liberalization proceeds, while the effects of broad money supply on output have been diminishing. Additionally, as it becomes harder to measure the effectiveness of quantity-based regulation, China's central bank has been more prudent to rely on quantitative intermediaries. Moreover, as much as 40% residual information of the Taylor rule will be omitted using price-based intermediaries, while factor augmentation fails to increase the explanatory power of quantitative intermediaries significantly. The correlation between quantitative intermediaries and the real economy has been weakening, so that the quantity-based monetary policy tools are no longer suitable for government intervention in China. We develop a structural vector autoregressive model with time-varying parameter and factor augmentation (TVP-FA-S-VAR model) to analyze the response of output gap to monetary policy shocks. We find that price-based regulation becomes increasingly effective as China's interest rate liberalization proceeds, while the effects of broad money supply on output have been diminishing. China's central bank has been more prudent to rely on quantitative intermediaries. As much as 40% residual information of the Taylor rule will be omitted using price-based intermediaries, while factor augmentation fails to increase the explanatory power of quantitative intermediaries significantly. The correlation between quantitative intermediaries and the real economy has been weakening, so that the quantity-based monetary policy tools are no longer suitable for government intervention in China. [ABSTRACT FROM AUTHOR]

The Central Bank, acting on behalf of the government, uses monetary policy to influence economic and financial activities in order to achieve price stability while also considering economic growth. The circulation of money supply in an economy is affected by monetary policy, which is reflected in the development of various economic and financial variables such as money supply, credit, exchange rates, and interest rates. This study analyzes the impact of inflation, interest rates, and e-money on money demand in Indonesia using a quantitative approach. The data used in this research are inflation, interest rates, e-money, and money demand from 2017 to 2022, sourced from the Central Bureau of Statistics and Bank Indonesia. The Error Correction Model (ECM) model is used for data analysis. The long-term ECM test results show that inflation has a significant negative effect on money demand, while interest rates do not have a significant effect on money demand. In the long term, the e-money variable has a significant positive effect on the demand for money. In the short term, however, inflation and interest rates do not affect the demand for money in Indonesia, while the e-money variable has a significant effect on the demand for money. [ABSTRACT FROM AUTHOR]

This paper investigates the long-run and short-run relationship between money supply and inflation in Pakistan, utilizing annual data spanning from 1981 to 2021. The key objective is to assess the impact of monetary policy, specifically money supply, on inflation dynamics in the country. To achieve this, the Autoregressive Distributed Lag (ARDL) bounds testing approach is employed, which is suitable for analyzing cointegration among variables with mixed integration orders. The results reveal both short and long-run cointegration between inflation, money supply, unemployment, and interest rates. Notably, unemployment demonstrates a negative correlation with inflation, while money supply and interest rates exhibit a positive relationship. These findings underscore the importance of dedicated policy measures to manage inflation effectively. The paper concludes by recommending the establishment of a policy implementation body and collaboration between the government and the central bank to ensure financial stability and control inflation through well-calibrated monetary and fiscal policies. [ABSTRACT FROM AUTHOR]

This article examines the relationship between inflation and Iraq's currency supply. In order to better inform monetary policy, this research investigates the connection between money supply and inflation. The article aims to provide policymakers with a better understanding of the factors contributing to inflation in Iraq. This research incorporates an econometric analysis of data acquired from the Central Bank of Iraq and other sources. The data covers a period from 2011 to 2022. Inflation and money supply are the focus of the time series regression model shown here. Inflation in Iraq may be linked to the country's money supply, the results suggest. Rapid and immediate responses to changes in the money supply are characteristic of inflation. The research shows additional factors in Iraq's inflation besides government policies and currency rates. The results of this study provide substantial knowledge of the origins of Iraq's inflation. According to the results, regulating the money supply is essential for controlling inflation. The analysis also shows how important it is to have a broader view of inflation and its causes. This information helps build effective methods to stabilise the economy and sustain price stability in Iraq. [ABSTRACT FROM AUTHOR]

In regard to the purpose of money use, economic theory provides a functionalist answer, while a dominant sociological view focuses on culture. However, Simmel noted the paradoxical nature of money in this respect. Money brings together both quantity and quality; therefore, it simultaneously has different potentialities for its usage. We conducted an exploratory factor analysis by using a representative sample (n = 2000) of the population in Austria to explore the potentialities of money usage. We found seven factors: freedom, community, status, institutional control, conflict, work-related control and household control. A discussion of the factors reveals the simultaneous, ambiguous existence of the qualitative and quantitative potentialities of the usage of money. We conclude that the ambiguity of money can only be described in all its contradictoriness by distinguishing between the concrete earmarking money for specific social purposes (Zelizer) and the potentially unspecific, open usability for alternative concrete or fictional purposes (Simmel). [ABSTRACT FROM AUTHOR]

The recent prevalence of digital currencies has challenged policymakers as they try to control the supply of money and rein in clandestine activities. Corruption and shadow economy are widely prevalent illegal/unobserved activities that have been hard to eliminate worldwide. These longstanding and entrenched activities have possibly found a new avenue to thrive and evade detection/punishment. So disentangling the nexus between corruption, shadow economy, and digital currencies is important. Using recent cross‐country data, this paper analyzes the interrelationships between corruption, shadow economy, and cryptocurrencies. We argue that a large underground sector in a nation provides a mechanism through which corrupt government officials use cryptocurrencies to conceal their unauthorized earnings. Employing formal mediation analysis, our results show that the positive nexus between corruption and cryptocurrency adoption is mediated by the shadow sector. Quantitatively speaking, three‐fourths of the correlation between corruption and cryptocurrency usage is mediated by the shadow economy. The primary implication of our findings is that effective monitoring of cryptocurrencies should pay attention to policies to control both corruption and the shadow economy. [ABSTRACT FROM AUTHOR]

This paper explores the origins of German banks' risk‐taking in the years preceding the 1931 crisis. The 1920s were marked by a large and prolonged increase in capital flows into Germany, chiefly from the United States and the United Kingdom. This coincided, at the individual bank level, with a rise in leverage and a fall in liquidity. We examine possible connections between the two phenomena. Our analysis is based on a combination of historiographical work and statistical modelling based on a newly hand‐collected bimonthly dataset on German reporting banks from 1925 to 1935. Bank by bank we examine the effects of foreign inflows on decisions related to leverage, lending, and liquidity. The Dawes Plan of 1924 and the relative absence of a too‐big‐to‐fail (TBTF) environment allow us to mitigate endogeneity concerns. We suggest that while capital inflows did not seem to impact banks' liquidity decisions, their impact on leverage was non‐negligeable. [ABSTRACT FROM AUTHOR]

We present and expand existing theories about why individuals may assess positive outcomes differently from negative outcomes in intertemporal choices. All of our theories—based on utility or cost considerations – predict a conventional magnitude effect for positive outcomes, that is, a negative relation between outcome size and subjective discount rates. For negative outcomes, however, implications are different for utility‐ and cost‐based approaches. We argue that the relevance of utility‐based aspects is strengthened in a money frame, leading to a conventional magnitude effect even for negative outcomes, whereas cost‐based considerations gain in importance in an interest rate frame, implying, in contrast, a "reverse" magnitude effect, that is, higher discount rates for (absolutely) higher outcome size. A web‐based experiment with 676 participants confirms our theoretical findings: the conventional magnitude effect prevails for positive outcomes in the money and the interest rate frame and negative outcomes in the money frame. However, there is a reverse magnitude effect for negative outcomes in the interest rate frame. Our results might help to better understand prevailing magnitude effects in practical applications and might also be apt to derive suggestions for better designing of intertemporal decision problems. [ABSTRACT FROM AUTHOR]

In this paper, we compare the dynamics of the growth rates of the original Divisia monetary aggregates, the credit card-augmented Divisia monetary aggregates, and the credit card-augmented Divisia inside monetary aggregates. This analysis is based on the methods of recurrence plots, recurrence quantification analysis, and visual boundary recurrence plots which are phase space methods designed to depict the underlying dynamics of the system under study. We identify the events that affected Divisia money growth and point out the differences among the different Divisia monetary aggregates based on the recurrence and visual boundary recurrence plots. We argue that the broad Divisia monetary aggregates could be used for monetary policy and business cycle analysis as they are exhibiting less fluctuation compared to the narrow Divisia monetary aggregates. They could positively affect policy decisions regarding environmental choices and sustainability. We also point out the changes in the monetary dynamics locating the 2008 global financial crisis and the Covid-19 pandemic. [ABSTRACT FROM AUTHOR]

This paper aims to study the phased influencing factors of renminbi (RMB) exchange rate (CNY against USD) and investigate the predictability of the factors selected by multimodel. We first take the time points when China's main exchange reform policies are launched as the demarcation points and divide the entire sample from July 2005 to December 2020 into three periods. Then, we select the potential predictors using several sources, including all factors (without any selection), the factors selected by each of the five commonly used machine learning methods, the significantly correlated factors selected by traditional regression analysis method, and multimodel‐driven factors. Finally, we predict the exchange rate based on the above selected factors and compare the prediction results. The research results show that the main influencing factors are different in different periods, and the influence of phase events cannot be ignored. Even if their influence on the exchange rate has decreased as a result of the "811" exchange rate reform, the money supply and foreign exchange reserves continue to be the primary drivers of RMB exchange rates during the whole period of the sample. Additionally, RMB exchange rate forward is a robust influencing factor in all periods. By comparing the forecast errors, we find that the prediction accuracy of the factors selected based on multimodel is higher than that of the factors selected based on a single method or the tradition method. The findings of this paper provide the following insights for exchange rate managers: In exchange rate risk management, it is important to pay attention to the impact of macroeconomic factors such as foreign exchange reserves and the impact of staged events, and market expectations of exchange rates are equally important. At the technical level, it is recommended to improve the forecasting accuracy by forecasting exchange rates based on common factors selected by multiple better machine learning methods simultaneously rather than those selected by a single method. [ABSTRACT FROM AUTHOR]

From the fourth quarter of 2007 to the second quarter of 2020, the monetary base in the euro area grew by 330%, the money supply by 61% and inflation measured by the consumer price index - only 17%. Interest rates are around zero and negative, inflation is low, and we often register deflation. This discrepancy between the growth of money and prices has not only practical dimensions for the ECB and FED monetary policy, but also a theoretical significance. In this contribution, we propose an interpretation of these trends on the basis of concepts developed by J. Kornai in his Economics of Shortage analysis, from which we derive our insights on the sovereign debt market situation in European countries. J. Kornai was an unclassifiable economist whose work reflected to some extent the influence of the Austrian School of economics. The point here is not to transpose Kornai's shortage economy analysis to European capitalist economies, but to show that similar phenomena are appearing today in a different institutional context. [ABSTRACT FROM AUTHOR]

This study empirically evaluates the effect of consumer confidence on consumer spending in Nigeria. Relatively little attention has been paid to the existence of a long-run relationship between consumer confidence and consumer spending in Nigeria, and this study aims to contribute to the existing literature in this regard by utilising quarterly data spanning from 2009 to 2023. Examining the relationship through the autoregressive distributed lag (ARDL) model, it was found that consumer confidence, money supply, and inflation have a significantly positive impact on consumer spending, while interest rates possess an adverse relationship with consumer spending in Nigeria in the long run. The findings of the study recommend that good infrastructure, ease of doing business, and reduction of tax rate on everyday purchasing are key contributors to consumers' optimism. Additionally, efficient responses to economic shocks and effective policy reformation according to the shift of the dynamic financial world are also crucial to making the economy well-run and maintaining the level of consumers' confidence. [ABSTRACT FROM AUTHOR]

We study the effects of monetary policy–induced changes in Tobin's q on corporate investment and capital structure. We develop a theory of the mechanism, provide empirical evidence, evaluate the ability of the quantitative theory to match the evidence, and quantify the relevance for monetary transmission to aggregate investment. [ABSTRACT FROM AUTHOR]

This study examines the impact of macroeconomic indicators on the liquidity of the Indian stock market by using the Granger Causality, Vector Auto-Regressive Model, and Impulse Response Functions. Numerous macroeconomic indicators were analysed at monthly and quarterly frequencies for their effect on the liquidity of NIFTY 500 stocks measured across four facets, i.e. depth, breadth, immediacy, and tightness. The study reveals that the tightness facet of liquidity is primarily affected by the indicators and further concludes that higher foreign investment inflows and gold prices impair the aggregate liquidity. In contrast, a surge in money supply strengthens the stock market liquidity. [ABSTRACT FROM AUTHOR]

This paper investigates the dominant attribute of housing in China for the period 2000 to 2017 with national monthly data. By employing VAR methodology and Chow test, the empirical results suggest that there is a statistically significant structural breakpoint in February 2009, and that the housing boom before 2009 was driven by self-occupation consumption demand while the rise in house prices since 2009 is a monetary phenomenon. These are consistent with the institutional backgrounds, when the first period encountered the end of housing as a welfare and rapid urbanization and the second period experienced the expansionary monetary policy introduced at the end of 2008. This implies that housing is gradually evolving from a necessity to a financial item, and policymakers should adopt policies that address the dominant attributes of housing at different periods.

The purpose of the article is to examine the post-pandemic business cycle in Poland and in the United States in the light of the Austrian business cycle theory. The study shows that this theory satisfactorily explains the post-pandemic business cycle. Moreover, it seems that the Austrian business cycle theory explains some important facts better than competing theories of business cycle. The analysis also indicates that the post-pandemic business cycle differs significantly in many respects from previous business cycles – and that these differences could be explained within the framework of the Austrian business cycle theory.

This study analyzes the relationship between macroeconomic factors that affect the inflation rate. Through our research, we will analyze the impact of money supply growth, economic growth, import level and export level on the inflation rate for 40 countries that we have taken. There are: 6 Latin American countries, 2 Western Balkan countries, 19 Europe countries, 10 countries of Asia, 2 countries of Africa and Australia, within 8 years, namely from 2012 to 2023. The data for the execution of the work were obtained from the World Bank as a credible institution for the publication of statistics and Trading Economics, Another important institution in terms of statistics where 320 observations which are included in the analysis, so the data of this study are second- hand data. Since we have a group of study countries, then the data type of the study is Panel. The econometric model that we used for analysis is the model with the method of small squares. The findings of this paper show that countries that increase the money supply will also face an increase in the inflation rate, so the impact of the money supply on the inflation rate is positive. In the research countries, the results show us that we have a very small difference in the average import and export, which results in a very small average economic growth.

Purpose – GDP growth, money growth and inflation are essential to an economy's macroeconomic stability and have a direct impact on the policymaking process. Sri Lanka is currently concerned about high inflation. Inflation is a monetary phenomenon. Inflation has been caused by monetary policy in several nations. According to the economic theories of Karl Marx, Irving Fisher and Milton Friedman, a continuous increase in the money supply causes inflation. This paper aims to investigate the relationship between Sri Lanka's GDP growth, money growth and inflation. Design/methodology/approach – An econometric model and the economic theories of Fisher and Friedman are used to figure out how money supply, inflation and economic growth are linked. Between 1990 and 2021, data were gathered from secondary sources. Findings – The increase in the money supply is found to cause inflation. Inflation has negative effects on both short- and long-term economic growth. Long-term, the increase in money supply has a negative effect on economic growth. Research limitations/implications – According to research, the money supply and inflation are inextricably linked, and the money supply has a direct impact on economic growth. As a result, the government should have an appropriate monetary policy and proposals to control inflation levels and stimulate economic growth. Originality/value – The paper adds to the existing literature in two ways. First, it fills in the lack of studies in Sri Lanka, where there are no papers on this important relationship, especially with a modern econometric study. Second, it tries to shed light on the asymmetric shocks (both positive and negative shocks and changes) between the three variables, which was not done in previous studies.

This study empirically evaluates the effect of consumer confidence on consumer spending in Nigeria. Relatively little attention has been paid to the existence of a long-run relationship between consumer confidence and consumer spending in Nigeria, and this study aims to contribute to the existing literature in this regard by utilising quarterly data spanning from 2009 to 2023. Examining the relationship through the autoregressive distributed lag (ARDL) model, it was found that consumer confidence, money supply, and inflation have a significantly positive impact on consumer spending, while interest rates possess an adverse relationship with consumer spending in Nigeria in the long run. The findings of the study recommend that good infrastructure, ease of doing business, and reduction of tax rate on everyday purchasing are key contributors to consumers’ optimism. Additionally, efficient responses to economic shocks and effective policy reformation according to the shift of the dynamic financial world are also crucial to making the economy well-run and maintaining the level of consumers’ confidence.

This paper theoretically examines the effect of an expansionary monetary policy on export quality and its ramifications on the aggregate employment of the unskilled workers in a competitive general equilibrium framework of a small open economy. Monetary policies are often pursued by the central bank of an economy to manage exchange rate fluctuations under a managed float regime, which may have adverse consequences for export-quality choices and thereby for export growth given the growing preference of buyers in richer nations for higher qualities of imports. Under optimal allocation of wealth over a portfolio of cash, domestic assets and foreign assets, we show that an increase in the domestic money supply affects the choice of export-quality through larger investment, capital formation and consequent endowment effect and through changes in the nominal exchange rate. Under less price-elastic demand for a non-traded good, export quality is upgraded when quality upgrading is relatively capital (than skill) intensive. The expansionary monetary policy may raise aggregate employment of unskilled workers due to larger investment and capital formation, but may lower it through changes in the quality of the export good. The overall effect is thus ambiguous. A larger initial size of bequests has a similar effect. [ABSTRACT FROM AUTHOR]

Banking sector credits have an important role in the functioning of the monetary transmission mechanism. Policies implemented to determine the money supply affect the credit channel and the real economy through monetary transmission. The sound functioning of the credit channel is closely related to the stable management and the level of development of the financial system. In this study, the relationship between commercial loans provided by the Turkish banking sector and employment is analyzed. The study utilizes monthly unemployment rates and commercial loans provided by the Turkish banking sector for the period 2015:M01-2023:M3. The stationarity levels of the variables are investigated with Augmented Dickey-Fuller (ADF) and Phillips-Perron (PP) unit root tests. Granger Causality test and Toda Yamamoto method are used to determine whether there is causality between the variables and if there is a causality relationship, its direction. According to the results of causality analysis, it is concluded that there is no causality relationship between employment data and Turkish banking sector commercial loans. [ABSTRACT FROM AUTHOR]

The article focuses on inflation, notably exploring the concept of "Taxation without Legislation". It discusses inflation as a monetary phenomenon, its causes including budget deficits and money printing, and its impact on government finances. It highlights a significant growth disparity between liquidity and the national product, suggesting a potential engineered poverty affecting the majority of the population.

Money supply adapts to the demand of credit and has a crucial impact in determining production levels. However, at the same time, under certain conditions the issuance of money may also boost inflation. In this article, with the help of Shaikh's 'classical theory', we explain the main reasons for the recent hyperinflation experienced in Venezuela. On the supply side, we analyze the context of loss of competitiveness due to the overvaluation of the national currency. On the other hand, we explore how the credit to the oil company (PDVSA) has led to an exponential growth in aggregate demand. [ABSTRACT FROM AUTHOR]

This study sought to reveal the effects of Turkish Lira and US dollar exchange rate (EXR), money supply (M2) on agricultural commodity producers' prices. The direction and the size of the relationship among the data was estimated using VECM Vector Error Correction Model (VECM). The results reveal that the causality runs from M2 to agricultural price (AP) in the short run, but not from AP to M2. In the long run the effect of EXR is more than M2. The coefficient of error correction term in the agricultural price equation is 0.0726 and is statistically significant at 1%. Referring to it, all of the system instability can be adjusted approximately in 14 months. This research shows that the exchange rate (EXR) and money supply (M2) have important long-run effects on agricultural prices (AP). In order to control agricultural prices, it is necessary to follow these macro variables closely. [ABSTRACT FROM AUTHOR]

The lack of direct and indirect instruments and the features of the Cuban monetary and financial environment have implicated the need to base the monetary policy on the use of nominal anchors for price stabilization. This article has the objective of analyzing the relevance of the official exchange rate, the money supply, and the regulated prices as nominal anchors since the economic system reformation of the early 1990s. With this objective in mind, the analysis provided by the article is divided into two sections. In the first, the use of the main nominal anchors in the macroeconomic stabilization carried out in the period 1990–2010 is evaluated. In the second, the factors that explain the loss of the main nominal anchors in the period 2011–2022 are examined. [ABSTRACT FROM AUTHOR]

Purpose: To study the key determinants of chronically high inflation in Iran. Design/methodology/approach: Relying on annual data from 1978 to 2019, the authors employ an Auto-Regressive Distributed Lag (ARDL) model and Error Correction Model (ECM) to study the inflationary effects of monetary and fiscal policies as well as exchange rate swings and sanctions intensification. Findings: The authors find that increase in money supply, depreciation of nominal exchange rate, increase in fiscal deficit and intensification of sanctions are among the key drivers of inflation in Iran. Their impact is profound in the long run, but in the short run only money supply and currency depreciation are significant. Also, when exploring the inflation in different components of Consumer Price Index (CPI), we find robust long- and short-run effects from money supply and exchange rate, while the effects of fiscal deficit and sanctions vary across different components. Originality/value: The authors contribute to the literature by setting apart the long-vs short-run effects of key variables on inflation in Iran. The authors also employ improved measures of fiscal deficit and sanctions that are shown to be of significance in the long run. Lastly, the authors go beyond the aggregate index and examine the variations in different CPI components. [ABSTRACT FROM AUTHOR]

The large-scale loss of ecosystem assets around the world, and the resultant reduction in the provision of nature's benefits to people, underscores the urgent need for better metrics of ecological performance as well as their integration into decision-making. Gross ecosystem product (GEP) is a measure of the aggregate monetary value of final ecosystem-related goods and services in a specific area and for a given accounting period. GEP accounting captures the use of many ecosystem services in production processes across the economy, which are then valued in terms of their benefits to society. GEP has five key elements that make it transparent, trackable, and readily understandable: (1) a focus on nature's contributions to people; (2) the measurement of ecosystem assets as stocks and ecosystem services as flows; (3) the quantification of ecosystem service use; (4) an understanding of ecosystem service supply chains through value realization; and (5) the disaggregation of benefits across groups. Correspondingly, a series of innovative policies based on GEP have been designed and implemented in China. The theoretical and practical lessons provided by these experiences can support continued policy innovation for green and inclusive development around the world. [ABSTRACT FROM AUTHOR]

In recent years, most low-income countries (LICs) have been remarkably successful in reducing inflation to single-digit levels, and many LICS are engaged in reforms to make their monetary policy frameworks more systematic, transparent, and forward-looking, often with technical support from the International Monetary Fund (IMF). To inform those initiatives, our paper provides new empirical evidence about how the characteristics of the monetary policy framework affects the propagation of shocks in LICS. First, we analyze a cross-country panel dataset of 79 LICs over the period 1990 to 2015 to assess the impact of external shocks on real GDP growth, and we find highly significant differences between LICs where the central bank targets monetary aggregates or inflation compared to LICs that use the nominal exchange rates as the main nominal anchor. Second, we use difference-in-difference methods to assess the evolution of economic growth in sub-Saharan Africa (SSA) over the period from 1986 to 1994, and we find highly significant differences between 9 countries in the Central African Franc (CFA) zone compared to a control group of 12 other SSA countries. Our findings show that central banks in LICs can face policy tradeoffs similar to those which have been highlighted for more advanced economies, and our analysis underscores the key role of the monetary policy framework in fostering price stability and sustained economic growth in LICs. [ABSTRACT FROM AUTHOR]

I revisit the old debate on the role of 'oil price shocks' in stoking inflation using wavelet coherency of oil and overall price inflation as well as partial coherency of the same given changes in real money supply. While exogenous shocks can influence the nature of short-term inflation fluctuations, I find support for inflation in early 2022 being a lagged demand-driven response to massive monetary growth in 2020. [ABSTRACT FROM AUTHOR]

Forecasting inflation and outflow is very important for the government to make price control policies. We propose SpVARX be applied to inflation and outflow forecasting. SpVARX can simultaneously accommodate interrelationships between variables, the influence of metric exogenous variables, and spatial aspects. Our study shows SpVARX has better forecasting performance than SpVAR, as most of SpVARX's Root Mean Square Errors (RMSEs) are smaller than SpVAR's. Based on the forecast, the highest inflation in Semarang and Solo will occur in November 2023, while the highest inflation in Yogyakarta will occur in December 2023. The highest outflow forecast for all these cities is in April 2023. [ABSTRACT FROM AUTHOR]

This paper assesses the growth-enhancing and growth-retarding effects of different budgetary fiscal variables using a balanced panel of 32 middle-income countries for the time period of 2000–2017. Much of previous research requires to be re-evaluated as it ignores the biases associated with either incomplete or wrong specification, or both, of the budget constraint and the money supply. This paper addresses these gaps and obtains more unbiased, consistent and efficient estimates for the fiscal variables, using both static and dynamic panel econometric techniques. Specifically, this paper finds that (1) larger tax and non-tax revenues retard economic growth; (2) higher allocation to public capital expenditure appears to have positive and significant effect on growth; (3) fiscal deficit appears to have neutral-growth effects; and (4) controlling broad money supply corrects for biases in the orthogonal specification. [ABSTRACT FROM AUTHOR]

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Arguably the greatest concern surrounding quantitative easing is its potential for expanding the money supply at a rate which outstrips the rate of growth in national output. This will almost surely lead to greater uncertainty in inflationary expectations and this, in turn, can have adverse consequences for stock prices. Our analysis employs the hedging procedures which underscore the Fundamental Theorem of Asset Pricing in conjunction with stochastic processes for stock prices and the money supply to design hedging strategies against potential downside movements in stock prices caused by the uncertainty in inflationary expectations associated with rapid monetary growth. [ABSTRACT FROM AUTHOR]

The study investigates the effect of fiscal policy on the inflation rate in a panel of 44 sub-Saharan African (SSA) countries over the period 2003–2020 using a non-linear system generalized method of moments (system GMM) and the dynamic panel threshold estimation techniques. The results show that the recent increase in inflation rate has a fiscal nature and that monetary policy alone may not provide an effective response. Specifically, the results indicate that a positive shock to fiscal policy (captured by public debts) has a positive and statistically significant effect on inflation, while a negative shock to public debt has a statistically non-significant impact on the inflation rate. Also, money supply exerted a positive and insignificant impact on inflation, indicating that the current inflation rate in the region may not be induced by money supply. However, the joint effect of public debts and money supply shows that public debts aid the effect of money supply on the inflation rate, albeit, not in the proportion predicted by the quantity theory of money. Further, the results also found a public debt threshold point of 60.59% of GDP. This implies the current inflationary pressure may be rooted in fiscal policy and that further accumulation of public debts beyond the benchmark established in the study would worsen the inflationary pressure in SSA. Importantly, the study found that for fiscal policy to spur growth and reduce inflationary pressure in SSA, the inflation rate should be managed and brought within a single-digit framework of 4%. The research and policy implications are discussed. [ABSTRACT FROM AUTHOR]

We study a game where households buy consumption goods to preempt inflation. This game features a unique equilibrium with high (low) inflation, whenever money supply is high (low). For intermediate levels of money supply, there exist multiple stable equilibria where inflation is either high or low. Equilibria with moderate inflation, however, do not exist, and can thus not be targeted by central banks. That is, depending on agents' equilibrium play, money supply is always either too high or too low for moderate inflation. Finally, we find that inflation rates of durable goods, such as houses, cars, luxury watches, or furniture, are useful leading indicators for changes in overall inflation. [ABSTRACT FROM AUTHOR]

The '100% money' proposal aims at divorcing the creation of money from banking, by requiring 100% reserves on transaction accounts. The public monetary authority would then be the sole issuer of means of payment, while the banks would function as true intermediaries, financing loans with pre‐existing money. This article, building on the works of 1930s economists such as Irving Fisher, presents ten arguments in favour of this reform proposal — arguing that it would, in particular, prevent cumulative variations in the money stock, facilitate monetary control, reduce government intervention in banking, improve public finances, and make money creation more neutral. [ABSTRACT FROM AUTHOR]

This study tests the Post-Keynesian theory regarding bank stock returns and money supply endogeneity in the context of South Asian countries. This study uses panel data set from different sources over twenty-eight (28) years. The research uses different econometric techniques before switching to the generalized method of moments (GMM). The empirical results indicate a significant positive effect of net interest rate margins on bank loans in South Asian countries, whereas a positive relationship exists between foreign to local interest rates and the money supply. The findings depict that positive associations exist between inflation and money supply of banks, and between the money supply and bank stock returns. More specifically, the GMM results show that the money supply has positively affected the stock prices of banks suggesting strong policies for the stakeholders of these economies for the sake of economic growth and sustainable development. [ABSTRACT FROM AUTHOR]

The study aims to explore the impact of governance and macroeconomic conditions on financial stability in developed and emerging countries. The study sample comprised 122 countries from 2013 to 2020, and a comprehensive set of variables was used to construct the financial stability index (FSI). The results of the two-step system GMM analysis, robust with D–K regression, indicate that interest rate, GDP growth, voice and accountability, political stability and absence of violence/terrorism, government effectiveness, regulatory quality, and control of corruption have a positive and statistically significant impact on financial stability. However, inflation, money supply, and the rule of law have adverse and insignificant effects on financial stability. Notably, the findings vary between developed and emerging countries due to differences in governance and macroeconomic conditions and their role in financial stability. The study concludes that regulatory governance and macroeconomic conditions are crucial for financial stability. These outcomes are significant for central banks, academia, and policymakers, as they emphasize the need for stable financial systems and sustainable, balanced growth through governance and macroeconomic conditions. [ABSTRACT FROM AUTHOR]

This study examines the impact of gender-specific human capital on economic growth and explores how this impact depends on the level of financial development. There is considerable debate about the contribution of gender-specific human capital to substantial economic growth. This study utilized panel data from 57 countries spanning the period of 1980 to 2020 and employed pooled OLS and fixed effect techniques for empirical analysis. The results indicate that both male and female human capital exert a significant and positive impact on economic growth. Furthermore, the findings reveal that financial development undermines the positive impact of male and female human capital on economic growth, suggesting substitutability between human capital and financial development. Based on these findings, this study proposes that policymakers focus on controlling excess money supply to enhance the effectiveness of financial development. [ABSTRACT FROM AUTHOR]

Many transmission channels of monetary policy have been proposed to enrich and deepen the understanding of its mechanisms. However, some channels have not been clarified, particularly for those unconventional quantitative policies implemented after 2008 financial crisis. In this paper, we develop a unified model of a credit economy where bank regulations and decisions and loanable funds market are placed at a central position, while stocks and flows are incorporated with each other to formulate banks' credit creation and circulation. We find that bank regulations can induce some new channels of monetary transmission by imposing credit constraints, including the new bank capital channel, the credit supply channel, the new bank balance sheet channel, and the new bank risk-taking channel. Comparing these channels with the traditional ones, we underscore the impact of bank regulations on monetary transmission. As aggregate demand can be decomposed into two monetary flows generated by money circulation and bank lending respectively, the direct channels of monetary transmission to aggregate demand can be renewed as follows: the money channel, the narrow money circulation channel, the new bank lending channel, and the repayment channel. In addition, based on the relevant data from the United States, we have conducted vector autoregressive (VAR) impulse response analysis to confirm the effectiveness of some direct channels. Our work not only aids in revisiting the monetary transmission from a credit view but also facilitates the assessment of efficiency of monetary policy. [ABSTRACT FROM AUTHOR]

We estimate elasticities of substitution between components of the Bank of England's household-sector UK Divisia monetary aggregate using quarterly data from 1999 to 2019, encompassing the period surrounding the global financial crisis. The demand system includes interest-bearing sight and time deposits at monetary financial institutions as components, since deposit data for banks (excluding mutuals) and for mutuals are no longer published separately. We find that the elasticities of substitution that relate to changes in the user cost of noninterest-bearing monetary assets imply inelastic substitution over all or almost all of the sample and, consequently, a conventional monetary aggregate would be a highly misleading economic indicator relative to a Divisia monetary aggregate. [ABSTRACT FROM AUTHOR]

Any global economic and financial disturbance affects trade and capital flows of our economy through exchange rate movements. The portfolio balance (PB) approach considers the capital flows as an additional variable explaining the exchange rate movements. This approach assumes domestic and foreign bonds to be imperfect substitutes. The bonds bearing high risk carry comparatively higher return in the form of risk premium. This study attempts to re-examine the empirical soundness of the PB model in respect of Indian rupee/ US dollar (INR/US $) exchange rate. It covers the period from 2000: 1 to 2023:1. Augmented Dickey Fuller test and Phillip Perron tests are used to test stationarity property of the variables. The Ordinary Least Square (OLS) methodology of regression is used for the purpose of estimation. Autocorrelation problem is dealt with by using the Cochrane Orcutt procedure. The PB model is estimated in naïve form as well as in partial adjustment form. The empirical finding shows that the PB model works well in partial adjustment framework rather than in its naïve form with speed of adjustment being three to four quarters. The money supply differential and relative real Gross Domestic Product (GDP) are identified as significant variables whereas the bond holding variable remained insignificant. However, in the long run, the model did not work. It is suggested that the fiscal and monetary policies that enhance capital spending in productive sectors should be implemented to achieve a gradually appreciating exchange rate. [ABSTRACT FROM AUTHOR]