Monetary variability and monetary variables in the Franc zone

Failure to detect or account for structural changes in economic modelling can lead to misleading policy inferences, which can be perilous, especially for the more fragile economies of developing countries. Using three potential monetary policy instruments (Money Base, M0, and Reserve Money) for 13 member-states of the CFA Franc zone over the period 1989:11-2002:09, we investigate the magnitude of information extracted by employing data-driven techniques when analyzing breaks in time-series, rather than the simplifying practice of imposing policy implementation dates as break dates. The paper also tests Granger's (1980) aggregation theory and highlights some policy implications of the results.

Admissible monetary aggregates for the euro area

We use the Fleissig and Whitney [Fleissig, A.R., Whitney, G.A., 2003. A new PC-based test for Varian's weak separability conditions. Journal of Business and Economics Statistics 21 (1), 133–144] weak separability test to determine admissible levels of monetary aggregation for the Euro area. We find that the Euro area monetary assets in M2 and M3 are weakly separable and construct admissible Divisia monetary aggregates for these assets. We show that real growth of the admissible Divisia aggregates enters the Euro area IS curve positively and significantly for the period from 1980 to 2005. Out of sample, we show that Divisia M2 and M3 appear to contain useful information for forecasting Euro area inflation.

Monetary models of exchange rates and sweep programs

Numerous studies find that monetary models of exchange rates cannot beat a random walk model. Such a finding, however, is not surprising given that such models are built upon money demand functions and traditional money demand functions appear to have broken down in many developed countries. In this paper we investigate whether using a more stable underlying money demand function results in improvements in forecasts of monetary models of exchange rates. More specifically, we use a sweepadjusted measure of US monetary aggregate M1 which has been shown to have a more stable money demand function than the official M1 measure. The results suggest that the monetary models of exchange rates contain information about future movements of exchange rates but the success of such models depends on the stability of money demand functions and the specifications of the models.

Implications of bank ownership for the credit channel of monetary policy transmission:evidence from India

Using bank-level data from India, we examine the impact of ownership on the reaction of banks to monetary policy, and also test whether the reaction of different types of banks to monetary policy changes is different in easy and tight policy regimes. Our results suggest that there are considerable differences in the reactions of different types of banks to monetary policy initiatives of the central bank, and that the bank lending channel of monetary policy is likely to be much more effective in a tight money period than in an easy money period. We also find differences in impact of monetary policy changes on less risky short-term and more risky medium-term lending. We discuss the policy implications of the findings.

UK industrial firms' dept decision under monetary policy transmission

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A world full of surprises:Bayesian theory of surprise to quantify degrees of uncertainty

In the specific area of software engineering (SE) for self-adaptive systems (SASs) there is a growing research awareness about the synergy between SE and artificial intelligence (AI). However, just few significant results have been published so far. In this paper, we propose a novel and formal Bayesian definition of surprise as the basis for quantitative analysis to measure degrees of uncertainty and deviations of self-adaptive systems from normal behavior. A surprise measures how observed data affects the models or assumptions of the world during runtime. The key idea is that a "surprising" event can be defined as one that causes a large divergence between the belief distributions prior to and posterior to the event occurring. In such a case the system may decide either to adapt accordingly or to flag that an abnormal situation is happening. In this paper, we discuss possible applications of Bayesian theory of surprise for the case of self-adaptive systems using Bayesian dynamic decision networks. Copyright © 2014 ACM.

Monetary policy preferences of the EMU and the UK

We estimate the central bank policy preferences for the European Monetary Union and for the UK. In doing so, we extend the theoretical framework suggested by Cecchetti etal. (TheManchesterSchool, Vol. 70 (2002), pp. 596-618), by assuming that policy preferences change across different regimes. Our empirical results suggest that the weight that policy makers put on inflation is typically profound. Furthermore, it appears that volatility shifts of the economic disturbances are the main factor, which generates variation in policy preferences.

Monetáris politikai tendenciák I. Eszköztárak (Tendencies in monetary policy I. - Asset prices)

A közgazdaságtan, szűkebben a monetáris politika előtt két elméleti és gyakorlati kihívást látok: a globális egyensúlytalanságoknak nevezett jelenséget és az eszközár problematikát. Előbbi a világgazdaságban koncentráltan fölhalmozódó adósságokat és követelésállományokat jelenti, utóbbi a banki és nem banki pénzügyi piacok folyamatainak lehetséges pénzügypolitikai vonatkozásaira utal. Mondandómat két cikkben fogalmazom meg. Ez az írás először a monetáris stabilitás és instabilitás kérdéskörét mutatja be történeti keretben, ami tekinthető mindkét aktuális témakör földolgozásához szükséges elméleti fölvezetőnek is. Ezt követi a monetáris politika és az eszközárak kapcsolatának vizsgálata. A következő cikk foglalkozik a globális egyensúlytalanságokkal. Azért választottam e sorrendet, mert a két téma szorosan összefügg, az itt leírt magyarázatok segíthetik a későbbiek megértését. Az írásban többször megfogalmazok saját véleményt, a hangsúly mégis a szakirodalom bemutatásán van. / === / Global imbalances and asset price booms and busts are the two main practical and theoretical challenges in economics, especially in monetary policy. The first of them concerns the accumulative tendencies of debts and claims in the world economy, the second challenge deals with the processes of bank and non bank money markets. These topics are dealt with in two articles. The first one presents the issue of monetary stability and instability from a historical perspective. With that the connections between monetary policy and asset prices will be studied. The next article will deal with global imbalances. The topics are closely related and this order helps better understanding. The articles are mainly based on the current literature although I insert my own views as well.

Monetáris hatásosság közösségi szinten (The community level efficiency of monetary policy)

A monetáris integráció központi szereplője a Közösség jegybankja. A közös valuta értékállóságának közvetlenül fő meghatározója a jegybank. Mozgásterét azonban több tényező alakítja. E tanulmány az intézményi és stratégiai, a tagállami (decentralizált fiskális) és a pénzpiaci környezet függvényében vizsgálja az Európai Központi Bank (ECB) lehetőségeit és monetáris politikájának hatásosságát. / === / The efficiency of the European Economic and Monetary Union is a big dilemma of European applied economics. The first part introduces the monetary policy made by ECB. Rates and objectives are the framework of efficiency analysis. The second part details the common pool resource problem in the community of EMU countries, and describes the prisoner's dilemma of indebting in a currency community. The EMU practice shows free riding behavior of many member states what generally causes higher default risks. The increasing indebtedness shows dysfunction too, as the ECB must adjust the interest rate to the higher default risk which means cost premiums for fiscally disciplined countries as well. The third part analyses the efficiency of the ECB through the standards of monetary transmission. The updated criteria can explain any success or failure of the ECB in a not perfectly homogeneous community. The measures of transmission used in the study are the way of financing (banks vs. market), terms of financing, structure of the banking sector, private sector indebtedness, structure of savings and wealth, price elasticity, interest rate elasticity, wage elasticity. They show that the single monetary policy can create tension in the community not only because of the fiscal differences but also due to money market discrepancies.

Tanulságok a gazdasági és monetáris unió számára a 2008-as világgazdasági válság kapcsán (Lessons for the Economic and Monetary Union from the 2008 global economic crisis)

Írásunkban a 2008-ban kitört világgazdasági válságnak a Gazdasági és Monetáris Unióra gyakorolt hatásait elemezzük. Tanulmányunkban rávilágítunk a Gazdasági és Monetáris Unió két olyan problémájára, amelyek a válság után váltak igazán nyilvánvalóvá. Egyrészt a görög államcsődveszély, illetve egyes, korábban jól teljesítő országok botladozása jelzi, hogy a Monetáris Unió intézményrendszere legalábbis hiányos. A másik kérdés összefügg az előzővel, és azon országok szemszögéből érdekes, amelyek csatlakozni kívánnak a GMU-hoz: felerősödtek azok a vélemények, amelyek a csatlakozás elhalasztása mellett foglalnak állást. Tanulmányunk második részében ezt a kérdést járjuk körbe. / === / In our paper we are analyze the effects of the economic crisis of 2008 on the Economic and Monetary Union. We are focusing on two core problems of the EMU which came to surface only after the outbreak of the crisis. First, we address the fiscal problems of Greece and other member states which performed well before the crisis. These problems show that there are major institutional shortcomings in the Monetary Union. The second question is connected to the first one and concerns the new member states of the European Union and their strategies to join the Euro zone. After the crisis more and more voices in the new member states suggest postponing EMU membership.

Fiscal and Monetary Institutions in Central, Eastern and South-Eastern European Countries

This paper studies the role of fiscal and monetary institutions in macroeconomic stability and budgetary control in central, eastern and south-eastern European countries (CESEE) in comparison with other OECD countries. CESEE countries tend to grow faster and have more volatile output than non-CESEE OECD countries, which has implications for macroeconomic management: better fiscal and monetary institutions are needed to avoid pro-cyclical policies. The paper develops a Budgetary Discipline Index to assess whether good fiscal institutions underpin good fiscal outcomes. Even though most CESEE countries have low scores, the debt/GDP ratios declined before the crisis. This was largely the consequence of a very favourable relationship between the economic growth rate and the interest rate, but such a favourable relationship is not expected in the future. Econometric estimations confirm that better monetary institutions reduce macroeconomic volatility and that countries with better budgetary procedures have better fiscal outcomes. All these factors call for improved monetary institutions, stronger fiscal rules and better budgetary procedures in CESEE countries.

Monetary efficacy in the community level

Hypothesis of the paper is that the monetary room for manoeuvre in the European Community is determined by the institutional and strategic characteristics of the ECB, moreover the financial market environment composed by multi-state community. The methodology of the paper is built on the evaluation of the decision making and strategy of ECB as institutional aspect, and the monetary transmission in national financial markets. In policy evaluation, the monetary targeting is surveyed through HICP, monetary base, central bank rates, exchange rates and treatment of price impacts. The transmission is examined through analysis of structure of the member state’s financial markets.

Alternative Monetary Strategies before EMU Membership in Central Europe

As more and more transition coutries join the eurozone it is becoming reasonable to investigate what monetary policy might be most successful for countries prior to the introduction of the euro. One possible alternative is inflation targeting, which has found application in numerous economies in the last two decades, including the Visegrád Countries. In this paper I am introducing some important aspects and an empirical examination of the monetary policy of the Visegrád Countries. I am providing an overview of previous empirical findings and trying to make some comparisons of new EU and recommendations for pre-accession countries, such as Croatia.

Magyar alkalmazkodás az Európai Unió monetáris együttműködéséhez - tanulságok (Hungarian adaption to the monetary cooperation)

A cikk röviden összefoglalja az optimális valutaövezetek elméletének fejlődési állomásait, miközben felvet néhány kérdést a 2008-ban kezdődött válsággal kapcsolatban. Ezt követően áttekinti az elmélet és a válság által felvetett problémákra a gazdasági és monetáris unió által adott válaszokat. Végül az elmélet, az európai szabályozás aktuális állapota és a hazai tapasztalatok, lehetőségek tükrében megvizsgálja, hogy a jelenlegi helyzetben Magyarországnak milyen érdekei és ellenérdekei fűződhetnek az euró bevezetéséhez. Az írás kísérletet tesz arra, hogy kijelölje a hazai gazdaságpolitika kívánatos irányvonalát. _______ The article briefly summarizes the developments of the optimum currency area (OCA) theory, while states some questions regarding the crises starting in 2008. Secondly, it reviews the solutions given by the economic and monetary union to the problems raised by the OCA theory and the crisis. Thirdly, it evaluates the pros and cons for Hungary to introduce the euro as its own currency in the light of the OCA theory, the state of the European legislation and the Hungarian track record and possibilities. Finally, it shows the desired direction for the official Hungarian economic and financial policy.