Communication by central banks has two goals to fulfill: One is to be accountable and transparent to the public for its policy. The other is to make monetary policy by guiding expectations as ...effective as possible. Diversity of views inside the bank is instrumental for appropriate monetary policy decisions, but creates a tremendous challenge for communication. Central banks dispose of a variety of communication tools. Forward guidance seen as a revolution in central banks׳ communication raises new questions. Not maximum, but optimal transparency should be the final stage to strive for.
Goodhart and Lastra (Open Econ Rev 29:49–68,
2018
) lay out the mechanisms through which populist political movements may affect central bank independence. This paper provides the first empirical ...evidence that one aspect commonly attributed to populism, namely national identity politics, has indeed negatively impacted on central bank independence in developing countries. Combining existing datasets on central bank independence and political variables in developing countries, panel regressions are run for a sample of 113 countries during 1975–2012. Results prove robust to various specifications and macroeconomic as well as institutional control variables.
Despite the adoption of a market-oriented regime, Reserve Bank of India explicitly practices sterilized intervention to normalize unfavourable developments in the market. This study seeks to find ...empirical evidence on the intensity to which the monetary authority was able to achieve its policy objective of directing exchange rate in the anticipated trail. The study employed an Autoregressive Distributed Lag (ARDL) model to estimate the central bank reaction function in this regard. It was found that 1% purchase of foreign exchange reserve (net intervention) depreciated Indian Rupee by 0.255% for long-term. Whereas in short-term, intervention followed “leaning against the wind” policy to curb market vagueness. The findings of the study recommend that there should be more coordinated approach between official intervention policy and monetary policy formulation in consonance with the economic fundamentals for increasing the effectiveness and sustainability of the intervention operations.
This study investigates the implications of the interaction of financial literacy, regulatory technology, and decentralized finance applications for financial sector development. A two-step ...analytical regression approach on EViews 10 was used, which performs a one-factor analysis for each variable to identify the individual impact of each factor. A linear FMOLS approach was used to evaluate the cooperative effect of integration. The methodology was implemented on a dataset comprising 2,880 observations from 23 financial institutions in Jordan.The findings support the hypothesized dynamic interrelations between the essential Fintech factors relevant to the sustainable development of the financial sector, including significant and insignificant factors with the impact of inflation, which provides an adequate understanding of Fintech’s evolution. Additionally, the outcomes consider post-2017 regulatory changes that reflect the role of supervision and regulation for the financial sector’s flexibility and efficiency. Therefore, the results reveal the essential contribution of integrating decentralized finance applications, financial literacy, and regulatory technology to the development of Jordan’s financial sector. Financial literacy serves as a facilitator, regulatory technology is a compliance enabler, and decentralized finance applications are driving forces of innovation and financial inclusion, ensuring a robust and sustainable financial ecosystem. It is shown that the interaction of factors forces the sector’s development, reflecting the world’s trend in digital inclusion and viable financial development.
Political monetary cycles are less likely to occur in countries with independent central banks. Independent central banks can withstand political pressure to stimulate the economy before elections or ...finance election-related increases in government spending. Based on this logic and supporting evidence, we construct a
de facto ranking of central bank independence derived from the extent to which monetary policy varies with the electoral cycle. The ranking avoids well-known problems with existing measures of central bank independence and provides independent information about average inflation and inflation volatility differences across countries.
It has been argued that central bank independence (CBI) may not only be beneficial for reaching the objective of price stability, but also for maintaining financial stability. Greater independence ...from external pressure implies that central banks are less politically constrained in acting to prevent financial distress, while it also will allow them to act earlier and more decisively when a crisis erupts. We estimate the relation between CBI and a newly constructed measure of financial instability using a dynamic panel model for the period 1985–2005 with a large set of control variables. We find a significant and robust negative relation between CBI and financial instability, which is mostly due to political independence.
A Black Swan in the Money Market Taylor, John B.; Williams, John C.
American economic journal. Macroeconomics,
01/2009, Letnik:
1, Številka:
1
Journal Article
Recenzirano
The recent financial crisis saw a dramatic and persistent jump in interest rate spreads between overnight federal funds and longerterm interbank loans. The Fed took several actions to reduce these ...spreads including the creation of the Term Auction Facility (TAF). The effectiveness of these policies depends on the cause of the increased spreads such as counterparty risk, liquidity, or other factors. Using a no-arbitrage pricing framework and various measures of risk, we find robust evidence that increased counterparty risk contributed to the rise in spreads but do not find robust evidence that the TAF had a significant effect on spreads.
The role of inflation versus output and exchange rate in designing monetary policy in Egypt has been subject to considerable debate in literature, even after the proclamation of price stability as ...the monetary policy objective in 2004 and the adoption of flexible exchange rate system in 2016. This study aims to investigate the main drivers of interest rate setting in Egypt throughout the period from 2005 to 2019. In this context, both an ARDL and NARDL econometric techniques are employed to estimate the backward-looking augmented Taylor monetary policy reaction function. The estimated equation estimates policy rate as a function in lagged inflation, lagged output gap, lagged policy rate, change in real effective exchange rate, in addition to other variables. The importance of this study arises from the lack of recent studies assessing interest rate setting in Egypt. The study concludes that monetary policy in Egypt has been accommodative to inflation and that Central Bank of Egypt responds asymmetrically to shocks in inflation, output and exchange rate.
Zusammenfassung
Ziel des Beitrags ist eine systematisch-kritische Auswertung der einschlägigen sozialwissenschaftlichen Studien über Zentralbanken und Geldpolitik. Ausgangspunkt sind maßgebliche ...Entwicklungen moderner Geldpolitik in der zweiten Hälfte des 20. Jahrhunderts. Zentralbanken und die Makroökonomik zeichnen sie mit Stichworten wie politische Unabhängigkeit, Preisniveaustabilisierung und Transparenz aus und werten sie als Erfolg. Die sozialwissenschaftliche Erforschung dieser Phänomene, die diesem Fortschrittsnarrativ oftmals konfligiert, lässt sich in drei Perspektiven untergliedern: institutionalistische, kommunikationsanalytische und performativitätstheoretische Ansätze. Den Zusammenhang zwischen makroökonomischem Wissen und geldpolitischem Steuerungswissen verhandeln wir als tendenziellen Fluchtpunkt dieser Arbeiten. Als Desiderat der Forschung benennen wir eine präzisere Analyse der Transformation spezifischer Elemente akademisch-makroökonomischen Wissens zur Zentralbankpraxis.
