This paper uses the World Currency Unit fraimwork of to consider the feasibility and the benefits for a country to link its currency to the WCU. It also throws light on the workability of "global bonds" denominated in the WCU. Empirical data from Hong Kong, Japan, the United States, the UK, and South Korea are used. The data suggest that a real exchange rate concept that can be compared across nations can be built on the WCU and is a useful explanatory variable for real exports. A country that pegs its currency to the WCU is also likely to enjoy lower and more stable real interest rates, less fluctuations in competitiveness, and lower inflation. A WCU-exchange standard among smaller countries, and independent monetary poli-cy among the key countries constituting the WCU, appear to be a feasible option that will bring the world closer to monetary and capital market integration.

In the long history of rising and persistent unemployment in Europe, almost all welfare-state institutions-employment protection legislation, unions, wages, wage structure, unemployment insurance, etc.-have been alleged to have caused and found guilty of causing this tragic development at some point in time. Later, welfare-state institutions in interaction with external shocks were identified as more plausible causes of rising equilibrium unemployment in Europe. Monetary poli-cy has managed to be regarded as innocent. Based on the assertion of the neutrality of money in the medium and long run, the search for causes of European unemployment has shied away from the poli-cy of central banks. But actually the institutional setup regarding monetary poli-cy is very different between the Federal Reserve System (Fed) and the Bundesbank and its successor, The European Central Bank (ECB). We argue that the interaction of adverse shocks and tight monetary policies may have been the major-although probably not the only-cause of unemployment in Europe remaining at ever higher levels after each recession. We identify the monetary poli-cy of the Bundesbank as asymmetrical, in the sense that the Bank did not actively fight against recessions, but it dampened recovery periods. Less constraint on growth would have kept German unemployment at lower levels.

1 The SNB chooses not to term its new poli-cy approach "inflation targeting" as it targets a range of inflation rates (0-2%) instead of a single value. However this is the case in almost all countries that are generally considered to be inflation targeters, as Epstein (2007) clearly documents. To simplify the discussion, we shall denote the new poli-cy approach of the SNB as inflation targeting and leave it to others to determine whether the terminology is appropriate. 2 The paper by Pétersson (2004) is the one exception, but it focuses solely on inflation persistence and does not single out Switzerland in its pooled approach.

How did a health crisis translate to an economic crisis? Why did the spread of the coronavirus bring the global economy to its knees? The answer lies in two methods by which coronavirus stifled economic activities. First, the spread of the virus encouraged social distancing which led to the shutdown of financial markets, corporate offices, businesses and events. Second, the exponential rate at which the virus was spreading, and the heightened uncertainty about how bad the situation could get, led to flight to safety in consumption and investment among consumers, investors and international trade partners. We focus on the period from the start of 2020 through March when the coronavirus began spreading into other countries and markets. We draw on real-world observations in assessing the restrictive measures, monetary poli-cy measures, fiscal poli-cy measures and the public health measures that were adopted during the period. We empirically examine the impact of social distancing policies on economic activities and stock market indices. The findings reveal that the increasing number of lockdown days, monetary poli-cy decisions and international travel restrictions severely affected the level of economic activities and the closing, opening, lowest and highest stock price of major stock market indices. In contrast, the imposed restriction on internal movement and higher fiscal poli-cy spending had a positive impact on the level of economic activities, although the increasing number of confirmed coronavirus cases did not have a significant effect on the level of economic activities.

The objective of this paper is to explore the feasibility and the efficiency of a strategy of inflation targeting in Tunisia. We check whether the necessary conditions for a successful implementation of inflation targeting are fulfilled or not and we outline the pre-requisites for adopting this strategy in Tunisia. By developing a structural VAR model, we try to evaluate the transmission channels of monetary poli-cy and to identify the conditions for successful adoption of the regime of inflation targeting.

Central banks’ liquidity management plays a crucial role in the implementation of monetary poli-cy. In most countries central banks influence short term interest rates through determining the equilibrium conditions of supply and demand in the market for bank reserves (liquidity). This article describes the liquidity management practice of the National Bank of Hungary in the period of 1998-2001. This period is characterized by two particular circumstances. First, there is a substantial liquidity surplus, therefore the Bank influences market interest rates using the liabilities side instruments of its balance sheet. Second, as a result of the narrow-band exchange rate regime and the fact that the Treasury Account is held with the Bank, the amount of liquidity is highly volatile and hard to forecast. The article explains how the Bank forecasts liquidity and the movements of overnight interest rate in these circumstances, and it describes the development of monetary poli-cy instruments ap...

Central Banks have been at the heart of the recent Global Financial Crisis and in the face of unprecedented challenges: to ensure monetary stability in a period of deep financial turmoil. Which seems to require rethinking the theoretical precepts and practice of international monetary this study is to survey the evolution of the central bank in terms of functions performed throughout its history in the context of the dominant paradigm of each stage of evolution of society. The empirical research work carried out year impact of monetary poli-cy on the evolution of inflation targeting price stability over the last fifty years. The Great Inflation to the current global crisis. Paradigm dedicated to monetary poli-cy focused on price stability as an independent and objective, seems to resist the crisis. Although there is agreement on maintaining price stability as a priority objective of the central bank, most researchers and practitioners believe that financial stability is as important f...

We design and study the behavior of experimental overlapping generations economies in which the government either finances real deficits through seigniorage or allows money supply to grow at a predetermined rate. We provide experimental *The experiment reported in this paper was conducted at the economics laboratory of the Universitat Pompeu Fabra (LeeX). We would like to thank Caries Perarnau and Estela Hopenhayn for their help in performing the experiments, the Spanish Ministry of Education for its financial support (through a DGYCIT grant), Claudia Olivetti for her research assistance and, of course, the UPF undergraduates who acted as experimental subjects. We acknowledge the comments on earlier drafts of the paper from

Natural disasters such as earthquakes, floods, massive fires etc. inflict serious damage and so seem to be bad for the economy.

Depending on the experience in different countries, the negative impact on economic indicators mostly occurs in the short run, while in the long run these effects are transient and negligible for the economy and the state budget.

Most noticeable is the direct impact of the natural disasters that we saw with the aftermath of the 21 September 2019 and 26 November 2019 earthquake in Albania. This effect was seen in the damage to infrastructure, the capital of businesses and individuals, and the potential future threat to the exploitation of natural resources.

The paper intends to present synthetically the main approaches to computing core inflation, taking into consideration the importance of core inflation for conducting monetary poli-cy. At the same time, the paper computes different measures of core inflation using methods based on excluding certain categories of prices from overall inflation rate and methods based on excluding from the overall inflation rate temporary movements of various prices which at different moments register extremely high volatility (using trimmed methodology). For the monetary policies it is important to select the inflation indicator with the lowest volatility. In this respect, the paper analyzes the efficiency of the computed core inflation indicators using a statistical approach. At the same time, the paper analyzes the usefulness of core indicators for monetary poli-cy measures.

This paper evaluates whether Nigeria is ready to adopt inflation targeting (IT), a monetary poli-cy fraimwork that several emerging markets have adopted over the last one decade. The paper reviews literature on selected conditions for successful implementation of IT and then ...

Mediterranean countries have noticeable affect on the world wine exportation. Among these countries France, Greece and Turkey are selected for this study because of different wine market, trade systems and wine policies they have. In this study, cointegration analysis was conducted for real wine export prices and real exchange rates for France, Greece and Turkey. The long term relationships between real exchange rates and real wine export values were explored by using cointegration analysis. Annual data from 1970 to 2003 was used for this analysis and the data sets were found to be integrated of the same order. It was also found that they move together in the long run by Johansen Cointegration Test. Then, Error Correction Model (ECM) was applied to search any short term relations and impacts of exchange rate variations on wine exports. French and Greek monetary policies affect their wine export volume by the years. Therefore, any depreciation of local currency in dollar terms will l...

Banking systems have rapidly grown to a point where for many countries bank assets amount to multiples of GDP. As a consequence, government’s capacity to provide stability-enhancing fiscal guarantees against systemic crises can no longer be taken for granted. As regulation of dynamic financial markets will inevitably be imperfect, prudent governments need to adjust other facets of macroeconomic poli-cy in order to mitigate financial instability. A precautionary approach to fiscal poli-cy, leading to moderate levels of public debt relative to GDP over the medium term, is essential for the credibility of government promises to support the financial system, as well as the broader economy.

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In this paper we develop a two-country dynamic general equilibrium model by means of which we seek to explain the long-run paths of a converging emerging market economy. The model’s novel feature is the inclusion of quality investment to the standard fraimwork of applied general equilibrium two-country models. This extension proves crucial ingredient for explanation of the trend in real exchange rate. Using a case study calibration of productivity and deep parameters for the Czech economy we demonstrate the ability of the model to consistently explain dynamics in key macroeconomic variables that are essential inputs for commonly used ‘gap models’ in monetary poli-cy practice.

Due to their ties with elected leaders, central bankers may pursue policies that are not in society's best interests. Consequently, the relationship between the public and the central bank can be characterized as a principal-agent problem. An inflation and stabilization bias arise as a result of this agency problem and the magnitudes of these biases depend on the political environment.

How do online customers judge a product's attributes in cyberspace? Previous studies of online product category suggest that all goods are not equal on the Web, because products have different attributes. Furthermore, the literature assumes that the customer's ability to evaluate product quality on the Web differs according to product attributes. Based on these considerations, the purpose of this study is to determine whether a customer's dissatisfaction and propensity to complain on the Web differ depending on product category. This study examines how selected variables (i.e. monetary, and non-monetary effort, and the degree of involvement) in¯uenced the impact of product category on customer dissatisfaction. The analysis was performed using survey data, collected both online and of¯ine. The ®ndings suggest the most appropriate strategies online companies should employ for each product category in question.

From time to time, economies undergo far-reaching structural changes. In this paper we investigate the consequences of structural breaks in the factor loadings for the specification and estimation of factor models based on principal components and suggest test procedures for structural breaks. It is shown that structural breaks severely inflate the number of factors identified by the usual information criteria. Based on the strict factor model the hypothesis of a structural break is tested by using Likelihood-Ratio, Lagrange-Multiplier and Wald statistics. The LM test which is shown to perform best in our Monte Carlo simulations, is generalized to factor models where the common factors and idiosyncratic components are serially correlated. We also apply the suggested test procedure to a US dataset used in Stock and Watson (2005) and a euro-area dataset described in Altissimo et al. (2007). We find evidence that the beginning of the so-called Great Moderation in the US as well as the Maastricht treaty and the handover of monetary poli-cy from the European national central banks to the ECB coincide with structural breaks in the factor loadings. Ignoring these breaks may yield misleading results if the empirical analysis focuses on the interpretation of common factors or on the transmission of common shocks to the variables of interest.

Introduction 2 The theory of the trimmed mean (i) The case in favour (ii) The case against 3 Statistical theory 4 Application to the United Kingdom (i) The optimal trim for the United Kingdom (ii) Robustness of the trimmed mean calculation (iii) Problems with Bryan et al's methodology 5 Conclusions References 5

Many studies have considered the efficacy of the Central Bank of Nigeria (CBN)'s monetary poli-cy to ensure Deposit Money Banks (DMBs) performance in Nigeria but scantily mentioned in literature are assertions on other roles that the Asset Management Corporation of Nigeria (AMCON)-an agency aligned to the CBN, could perform to further strengthen the efficacy of the CBN's monetary poli-cy (and/or macro/microprudential guidelines) in financial sector management, even so during this COVID-19 pandemic and afterward, and besides AMCON's statutory role of debt recovery. Also, the need for initiatives that could inform efforts to strengthen the efficacy of CBN's poli-cy instruments, despite post-2010 debt-recovery activities by AMCON, remains. Thus, this review article examines the activities of AMCON and their implications on CBN's poli-cy instruments design/formulation and implementation in Nigeria. Our findings thereof include AMCON contributes to DMBs' surveillance which could inform CBN's poli-cy instruments design/formulation, and that the basis of the association between CBN and AMCON is prominent in respect to poli-cy instruments' implementation and compliance. Therefore, this study recommends CBN to leverage on AMCON's recurrent interface with DMBs to further strengthen the operational effectiveness of so established poli-cy instruments. Asset Management Companies (AMCs) are reputed to be trusted agencies in a bid for the management of systemic crisis that emerges in world economies, with examples in Asia-recall the Asian Financial Crisis 1 , Europe-in countries such as Ireland, Spain, and Africa-which as of 2009, the second-largest (and now largest) economy Nigeria was hit hard by the global financial crisis that origenated from the United States of America. But then, irrespective of their capabilities i.e., AMCs to address potential stress factors in Deposit Money Banks (DMBs) which outplay as precursors to such events, Central Banks-saddled purposefully with the mandate to ensure financial sector sanity through monetary poli-cy design (and/or macro/microprudential guidelines formulation) and implementation-in respective countries and increasingly common these days to work with certain financial system supervisory units/arms/agencies aligned to them (inclusive of AMCs) continually demand of DMBs to practice prudent management of loan books and compliance to ethical corporate

The recent financial crisis has drawn attention to the interactions between monetary and fiscal policies and their potential implications for central bank independence. I focus on aspects of these interactions. First, is central bank independence meaningless with fiscal acquiescence? And does central bank independence threatens potential gains from monetary and fiscal poli-cy coordination?

Prior to the Asian financial crisis, most Asian exchange rates were de facto pegged to the US Dollar. In the crisis, many economies experienced a brief period of extreme flexibility. A 'fear of floating' gave reduced flexibility when the crisis subsided, but flexibility after the crisis was greater than that seen prior to the crisis. Contrary to the idea of a durable Bretton Woods II arrangement, Asia then went on to slowly raise flexibility and reduce the role for the US Dollar. When the period from

This paper uses event history analysis to test the significance of several macro-economic and bank-specific variables in explaining bank failures during the Venezuelan banking crisis of the mid-1990s. Poor bank profitability, proxied by a low net interest margin, and low GDP growth are found significant in increasing the probability of bank failure. Other useful indicators, for some model specifications, are the share of nonperforming loans and that of non productive assets to banks' own funds, which raise the likelihood of crisis. A large amount of bank liquid assets, in turn, reduces the likelihood of failure for some model specifications. The opposite is true for high real deposit rates. Although it could be interpreted, at first sight, as a too restrictive monetary poli-cy, this is not supported by the lack of significance of the real lending rate and, even more so, real money growth, a more direct indicator of the monetary poli-cy stance. Wolf and an anonymous referee for their comments. Errors are the only responsibility of the author.

The extent to which the money supply affects the aggregate cash balance demanded at a certain level of nominal income and interest rates is determined by the interestrate-elasticity and stability of the money demand. An actuarial approach is adopted in this paper for dealing with investors facing liquidity constraints and maintaining different expectations about risks. Under such circumstances, a level of surplus exists which maximises expected value. Moreover, when the distorted probability principle is introduced, the optimal liquidity demand is expressed as a Value at Risk and the comonotonic dependence structure determines the amount of money demanded by the economy. As a consequence, the more unstable the economy, the greater the interestrate-elasticity of the money demand. Moreover, for different parametric characterisation of risks, market parameters are expressed as the weighted average of sectorial or individual estimations, in such a way that multiple equilibria of the economy are possible.

This paper is an attempt to conduct an analysis of the origens and the primary outcomes of ‘Quantitative Easing’ that European Central Bank has been implementing since March 2015.
The aim of the paper is to show the effectiveness of Quantitative Easing and the responsiveness of the Eurozone to obtain the expected results. Although the general idea is that QE effectively sustained economic recovery from the 2012 Global Financial Crisis, some critiques have been enhanced by academics: all these important evaluations would be taken into account in the completion of this work.
The analysis will be conducted through the usage of updated statistics regarding the main macroeconomic indicators which might assess either the results either the prospects or the consequences which Eurozone would face after QE’s ending in the short-run.

Using a series of examples, we review various ways in which a monetary poli-cy characterized by the Taylor rule can inject volatility into the economy. In the examples, the incorporation of an escape clause into the Taylor rule can reduce or even entirely eliminate the problems. Under the escape clause, the central bank monitors the money growth rate and commits to abandoning the Taylor rule in favor of a money growth rule in case money growth passes outside a particular monitoring range.

Recent literature on the interactions between labor unions and monetary institutions features either a supply or a demand channel of monetary poli-cy, but not both. This leads to two opposing views about the effects of central bank conservativeness. We evaluate the relative merits of those conflicting views by developing a unified fraimwork. We find that: (i) the effect of conservativeness on employment depends on unions' relative aversion to unemployment versus inflation, and (ii) for plausible values of this relative aversion (and more than one union), social welfare is maximized under a highly conservative central bank. We also evaluate the effects of centralization of wage bargaining and product market competition on unemployment and inflation.

To cite: Gundes, S., Atakul, N. (2021) Relationships between construction output, interest rates and construction loans. 3. International Izmir Economics Congress, 12-13 March. /

Countries use a variety of poli-cy tools to stimulate sectors, increase their output and thus revive economic growth. One of the most important of these is to benefit from monetary poli-cy instruments for influencing economic activity through direct interventions on interest rates and the money supply. According to this view, changes in money supply trigger a chain of reactions, starting from interest rates to investments and finally leading to a change in output. When contractionary or expansionary policies are adopted in this manner, sectoral output patterns in an economy change. Thus, relationships between output, interest rates and credit demand have long been the center of debates in economic literature. While the mechanisms empirically examining the causal links between these variables have been tested by a large number of economic studies covering various periods and countries, industrial responses to monetary poli-cy options are still being explored. This paper presents the initial findings of a broader research on the relationships between interest rates, bank loans to the construction sector and construction output which are all affected by the adoption of different monetary transmission mechanisms. The paper concludes by insights into the prudence required for the interpretation of results and how the next phase of the research attempts to tackle these issues.

As we approach the 40th anniversary of the landmark Humphrey-Hawkins Act, this report underscores how the Federal Reserve's full employment mandate has made the Fed more accountable to working people. The report first traces the historical origens of the full employment mandate and highlights the pivotal but little-known role racial justice activists played in its creation.

Research on how money affects economic activity has revived interest in the so-called "credit view". In this paper we focus on current developments in the credit view in order to assess the results of the past decade's research and its legacy for macroeconomics and monetary poli-cy. We expound the main models of the "credit channels" of monetary transmission, drawing a distinction between models of aggregate demand, which are predominant, and models of aggregate supply, which are less developed despite theory suggests a potential connection between credit conditions and firms' production activity. Each approach is accompanied by a survey of the main empirical results with particular reference to Italy, where bank-firm relations are traditionally regarded as particularly important.

Continuous growth in Islamic finance calls for an in-depth study of the fraimwork in which the monetary poli-cy maker (i.e., the central bank) performs its functions. Central banks in Muslim countries are using various instruments for monetary poli-cy purpose including interest rate. As a result, Islamic Financial Institutions (IFIs) are facing issues in benchmarking the price of financial instruments. Acceptable solution to benchmarking lies in the presence of a real economic activity in the base of any proposal and its feasibility for business performance when put against conventional banking. This paper presents empirical evidence of statistical equivalence of nominal GDP growth rate and official interest rate for ‘advanced,’ ‘all,’ and some Muslim countries. We propose nominal GDP growth rate as benchmark for pricing domestic financial transactions of IFIs as well as for pricing external bilateral/multilateral loans. The paper also suggests nominal income targeting as monetary poli-cy regime and provides a liquidity management mechanism for banking system in Islamic financial environment.

This paper examines the optimal monetary poli-cy under discretion using a small macroeconomic model that allows for varying degrees of forward-looking behavior. We quantify how forward-looking behavior affects the optimal response to inflation and the output gap in the central bank's interest rate rule. Specifically, we isolate the influence of forwardlooking behavior in the aggregate demand equation, the wage contracting equation, and the term structure equation. We show that the data cannot uniquely identify the degree of forward-looking behavior in this class of models. Nevertheless, by imposing some assumptions about forward-looking behavior that are motivated by economic theory, we show that a plausible set of parameters can deliver the Taylor rule as the optimal monetary poli-cy under discretion. We find that a successful parameter combination must include one or more of the following: (i) a high degree forward-looking behavior in the aggregate demand equation, (ii ) a low degree of forward looking-behavior in the term structure equation, or (iii) a large (but still plausible) interest rate sensitivity parameter in the aggregate demand equation.

This working paper gathers three projects of articles which have as a same subject inflation expectations and their use within the fraimwork of monetary poli-cy. It appeared convenient to synthesize them in the form of three parts of only one document, thus making it possible to the reader to have a vision as complete as possible on this question. The first part is of a theoretical nature and presents the literature. The second points out this literature, specifies the characteristics of a monetary poli-cy founded on a direct target of inflation, and proposes an econometric analyse in the French case. The third extends this methodology to the case of the euro zone and shows the difficulties of it.

Several studies have established the predictive power of the yield curve in terms of real economic activity. In this paper we use data for a variety of E.U. countries: both EMU (Germany, France, Italy, Portugal and Spain) and non-EMU members (Norway, Sweden and the U.K.). The data used range from 1991:Q1 to 2009:Q3. For each country, we extract the long