11,722 research outputs found
Essays on monetary policy and financial stability
Doutoramento em EconomiaBy focusing on the relationship between financial stability and monetary policy for the cases of Chile, Colombia, Japan, Portugal and the UK, this thesis aims to add to the existing literature on the fundamental issue of the relationship between financial stability and monetary policy, a traditional topic that gained importance in the aftermath of the GFC as Central Banks lowered policy rates in an effort to rescue their economies. As the zero-lower bound loomed and the reach of traditional monetary policy narrowed, policy makers realised that alternative frameworks were needed and hence, macroprudential policy measures aimed at targeting the financial system as a whole were introduced.
The second chapter looks at the relationship between monetary policy and financial stability, which has gained importance in recent years as Central Bank policy rates neared the zero-lower bound. We use an SVAR model to study the impact of monetary policy shocks on three proxies for financial stability as well as a proxy for economic growth. Monetary policy is represented by policy rates for the EMEs and shadow rates for the AEs in our chapter. Our main results show that monetary policy may be used to correct asset mispricing, to control fluctuations in the real business cycle and also to tame credit cycles in the majority of cases. Our results also show that for the majority of cases, in line with theory, local currencies appreciate following a positive monetary policy shock. Monetary policy intervention may indeed be successful in contributing to or achieving financial stability. However, the results show that monetary policy may not have the ability to maintain or re-establish financial stability in all cases. Alternative policy choices such as macroprudential policy tool frameworks which are aimed at targeting the financial system as a whole may be implemented as a means of fortifying the economy.
The third chapter looks at the institutional setting of the countries in question, the independence of the Central Bank, the political environment and the impact of these factors on financial Abstract stability. I substantiate the literature review discussion with a brief empirical analysis of the effect of Central Bank Independence on credit growth using an existing database created by Romelli (2018). The empirical results show that there is a positive relationship between credit growth and the level of Central Bank Independence (CBI) due to the positive and statistically significant coefficient on the interaction term between growth in domestic credit to the private sector and the level of CBI. When considering domestic credit by deposit money banks and other financial institutions, the interaction term is positive and statistically significant for the case of the UK for the third regression equation. A number of robustness checks show that the coefficient is positive and statistically significant for a number of cases when implementing a variety of estimation methods. Fluctuations in credit growth are larger for higher levels of CBI and hence, in periods of financial instability or ultimately financial crises, CBI would be reined back in an effort to re-establish financial stability. Based on the empirical results, and in an effort to slow down surging credit supply and to maintain financial stability, policy makers and governmental authorities should attempt to decrease the level of CBI when the economy shows signs of overheating and credit supply continues to increase.
The fourth chapter looks at the interaction between macroprudential policy and financial stability. The unexpected interconnectedness of the global economy and the economic blight that occurred as a result of this, recapitulated the need to implement an alternative policy framework aimed at targeting the financial system as a whole and hence, targeting the maintenance of financial stability. In this chapter, an index of domestic macroprudential policy tools is constructed and the effectiveness of these tools in controlling credit growth, managing GDP growth and stabilising inflation growth is studied using a dynamic panel data model for the period between 2000 and 2017. The empirical analysis includes two panels namely an EU panel of 27 countries and a Latin American panel of 7 countries, the chapter also looks at a case study of Japan, Portugal and the UK. Our main results find that a tighter macroprudential policy tool stance leads to a decrease in both credit growth and GDP growth while, a tighter macroprudential policy tool stance results in higher inflation in the majority of cases. Further, we find that capital openness plays a more important role in the case of Latin America, this may be due to the regionâs dependence on foreign capital flows and exchange rate movements. Lastly, we find that, in times of higher perceived market volatility, GDP growth tends to be higher and inflation growth tends to be lower in the EU. In the other cases, higher levels of perceived market volatility result in higher inflation, higher credit growth and lower GDP Abstract growth. This is in line with expectations as an increase in perceived market volatility is met with an increased flow of assets into safer markets such as the EU.
This thesis establishes a relationship between financial stability and monetary policy by studying the response of Chile, Colombia, Japan, Portugal and the UK in the aftermath of the GFC as Central Banks lowered policy rates in an effort to rescue their economies. In short, the results of the work conducted in this thesis may be summarised as follows. Our results show that monetary policy contributes to the achievement of financial stability. Still, monetary policy alone is not sufficient and should be reinforced by less traditional policy choices such as macroprudential policy tools. Secondly, we find that the level of CBI should be reined in in times of surging credit supply in an effort to maintain financial stability. Finally, we conclude that macroprudential policy tools play an important role in the achievement of financial stability. These tools should complement traditional monetary policy frameworks and should be adapted for each region.info:eu-repo/semantics/publishedVersio
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Essays in Macroeconomics
This dissertation consists of three chapters, each containing a distinct research paper in the field of macroeconomics. In the first chapter, I estimate the impact of mutual fund flows on corporate bond prices, issuance and firm investment. I leverage variation caused by the COVID-19 induced financial panic of March 2020 and find that safer firms suffered a larger impact in the component of bond spreads that does not compensate for expected default risk. However, I do not detect impacts of fund flows on issuance or investment.
A simple model predicts liquidation decisions and price responses as being driven by demand and liquidation elasticities, which depend on the characteristics of the bond return processes. In the second chapter, we ask: what is the importance of firm and bank credit factors in determining investment responses to monetary policy? We decompose variation in corporate loan growth rates into purely firm-level and bank-level variation. The estimated factors are correlated with a set of variables that proxy for the firmâs and bankâs financial health. Firms with a higher borrowing factor experience relatively larger investment responses to an unexpected interest rate shock; the effect is muted when the shock is the reveal of central bank information. The bank factor does not induce similar heterogeneity in investment responses.
In the third chapter, we ask: what is the nature of optimal monetary policy and central bank disclosure when the monetary authority is uncertain about the economic state? We consider a model in which firms make nominal pricing decisions and the central bank sets the nominal interest rate under incomplete information. We find that implementing flexible-price allocations is both feasible and optimal despite the existence of numerous measurability constraints; we explore a series of different implementations. When monetary policy is sub-optimal, public information disclosure by the central bank is welfare-improving as long as either firm or central bank information is sufficiently precise
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THREE ESSAYS ON MACROECONOMICS AND DEVELOPMENT
This dissertation is a collection of essays that relate, in different forms, macroeconomic policies to economic development. Essay 1 provides evidence that austerity shocks have longrun negative effects on GDP. Besides addressing the important gap in the growing fiscal research regarding the short time horizon of the estimations, the paper analyzes two other important assumptions made in the literature regarding the (i) symmetry of episodes of fiscal expansion and contraction and (ii) uniformity of fiscal multipliers for different sizes of shocks. We use narrative fiscal shocks and propensity score reweighting in a local projections setup to account for the potential endogeneity of austerity policies and the non-linearity of its effects over time. The estimation is also adapted to eliminate the bias that emerges when multiple shocks might occur within the time horizon of interest. Our baseline results show that contractionary fiscal shocks larger than 1.5% of GDP generate a negative effect of more than 3% on GDP even after 15 years. The drop in GDP reaches 5.5% for fiscal contractions larger than 3%. Evidence is also found linking austerity with smaller capital stock in the long-run. The results are robust to different fiscal shocks datasets, the exclusion of particular countries and shocks, alternative estimation methods, and the use of cleaner controls. Besides understanding the consequences of this particular policy, the results contribute to the broader discussion on the long-run effects of demand by suggesting that such shocks might permanently affect the economy.
Essay 2 reviews different literature strands and performs an empirical test to evaluate how capital ownership, particularly its nationality, might affect long-run economic development. Our results indicate that low and middle-income countries with larger foreign capital stock in 1980 had lower economic growth over the next 39 years. The estimations also indicate that these economies developed a less specialized export basket, which became relatively more concentrated in low-tech goods. The results are inverted to high-income economies, for which the effects are positive on GDP growth and export specialization and complexification. The results are in line with the evidence that countries can benefit from foreign investment only if they have sufficiently developed âabsorptive capabilitiesâ (e.g., financial markets and human capital). The results can also be interpreted in light of theoretical and empirical evidence that foreign capital might reinforce static comparative advantages in developing economies, particularly in middle-income ones.
Essay 3 is a paper co-authored with Peter Skott (published at Industrial and Corporate Change; Martins and Skott (2021)). The article presents a model in which distributional conflict and cross-sectoral interactions between demand and supply side forces determine inflation in developing countries. We show that the standard macroeconomic policy recommendations of inflation targeting and balanced budgets (i) increase volatility by amplifying external shocks and (ii) can lead to premature deindustrialization. The recent Brazilian experience is used to illustrate the argument
Resilience and food security in a food systems context
This open access book compiles a series of chapters written by internationally recognized experts known for their in-depth but critical views on questions of resilience and food security. The book assesses rigorously and critically the contribution of the concept of resilience in advancing our understanding and ability to design and implement development interventions in relation to food security and humanitarian crises. For this, the book departs from the narrow beaten tracks of agriculture and trade, which have influenced the mainstream debate on food security for nearly 60 years, and adopts instead a wider, more holistic perspective, framed around food systems. The foundation for this new approach is the recognition that in the current post-globalization era, the food and nutritional security of the worldâs population no longer depends just on the performance of agriculture and policies on trade, but rather on the capacity of the entire (food) system to produce, process, transport and distribute safe, affordable and nutritious food for all, in ways that remain environmentally sustainable. In that context, adopting a food system perspective provides a more appropriate frame as it incites to broaden the conventional thinking and to acknowledge the systemic nature of the different processes and actors involved. This book is written for a large audience, from academics to policymakers, students to practitioners
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Ensuring Access to Safe and Nutritious Food for All Through the Transformation of Food Systems
Central-provincial Politics and Industrial Policy-making in the Electric Power Sector in China
In addition to the studies that provide meaningful insights into the complexity of technical and economic issues, increasing studies have focused on the political process of market transition in network industries such as the electric power sector. This dissertation studies the centralâprovincial interactions in industrial policy-making and implementation, and attempts to evaluate the roles of Chinese provinces in the market reform process of the electric power sector. Market reforms of this sector are used as an illustrative case because the new round of market reforms had achieved some significant breakthroughs in areas such as pricing reform and wholesale market trading. Other policy measures, such as the liberalization of the distribution market and cross-regional market-building, are still at a nascent stage and have only scored moderate progress. It is important to investigate why some policy areas make greater progress in market reforms than others. It is also interesting to examine the impacts of Chinese central-provincial politics on producing the different market reform outcomes. Guangdong and Xinjiang are two provinces being analyzed in this dissertation. The progress of market reforms in these two provinces showed similarities although the provinces are very different in terms of local conditions such as the stages of their economic development and energy structures. The actual reform can be understood as the outcomes of certain modes of interactions between the central and provincial actors in the context of their particular capabilities and preferences in different policy areas. This dissertation argues that market reform is more successful in policy areas where the central and provincial authorities are able to engage mainly in integrative negotiations than in areas where they engage mainly in distributive negotiations
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National Languages, Multilingual Education, and the Self-proclaimed "Militants" for Change in Senegal
Education in Senegal has since Independence in 1960 relied on French, the language of the colonizer and a foreign language for most Senegalese learners. In Senegal, national languages refer to African languages, which are not officially enacted as languages of instruction in formal schooling in comparison to French, the former colonial and current official language. However, in 2015, the Ministry of Education adopted a bilingual education policy based on national (Senegalese) languages. This is due in no small part to the advocacy work of Senegalese national language activists or militants (strong advocates in French, drawing on a political connotation).
This study looks at these self-proclaimed militantsâ lived experiences with national languages and education, the extent of their multi-generational work and network, and their influence in shaping the language-in-education policy landscape at what appears to be a moment of âcritical junctureâ with the adoption of a bilingual education policy within the Ministry of National Education.
A qualitative case study, it draws on in-depth interviews with these militants, historical and policy document analysis, and participant-observations to answer the following question: âHow and why have self-proclaimed militants advocated for the use of national languages in the Senegalese educational system since the 1950s, and what are their current contributions at this critical moment in possible language-in-education policy change?â
Situated in a sociocultural framework, this study draws on Walter Mignoloâs (1991) decolonial theory of âborder thinkingâ and Senegalese decolonial authors to amplify the voices, innovations, and contributions of Senegalese bi-/multilingual education researchers, practitioners, and advocates. Decolonizing and delinking knowledge is particularly important in the field of bi-/multilingual education and literacy as research and practice are often exported from the Global North to Global South through international development and aid programs, when in fact, contexts of the Global North would gain more in learning from models of the Global South. In the context of Senegal, the militantsâ engagement in bilingual education is an act of self-determination and sovereignty, to move away from inherited and internalized patterns of colonial education and at the same time navigate the dynamics of aid and development in education, in particular, international donor agencies agendas and funding mechanisms
Changing society: pioneering women entrepreneurs in Saudi Arabia.
The research examines the role of institutions influencing Saudi female entrepreneurs, and how they became enabled to be social agents and institutional entrepreneurs in a very traditional, family-orientated society - albeit facing pressures to change. In acknowledging the uniqueness of the social-cultural context in Saudi Arabia, this study adopts a qualitative design. Specifically, purposive and snowball sampling techniques were implemented to gather primary qualitative data. The data draw on 31 interviews with female entrepreneurs residing in Jeddah, capturing the practical experiences of these entrepreneurs, and their engagement with the informal and formal institutions of their immediate societal surroundings. The analysis relies on the constant-comparative method (Anderson and Jack 2015) to illicit the meanings and implications taken from context, and also how this informs the day-to-day activities of the entrepreneur (Anderson et al. 2012). This study has found that existing institutions both constrain and enable Saudi women's entrepreneurship. In particular, the obligations and responsibility of Arab families are turned into an advantage, in the form of a patient resource base or networks of knowledge development. We saw too how pioneering efforts, in conjunction with other change, have begun to modestly alter the opportunity structure in Saudi Arabia, with the entrepreneur acting as an agent of change. Saudi women's entrepreneurship is thus best characterised as a recursive process between these entrepreneurs and the social system, which is an essential resource for - and product of - situated actions. This research makes a modest contribution to the long-running discussions on women's entrepreneurship in the context of the Arab world. The findings cannot suggest that it is going to be easy or smooth for future women entrepreneurs; traditions continue and there are also vested patriarchal interests. Nonetheless, increasing numbers of Saudi women are involved in growing their businesses. These pioneers have changed society; a modest, but progressive change for the better. This study has several implications. First, the produced empirical findings have highlighted certain areas for further improvement of female entrepreneurship in Saudi Arabia, which goes in keeping with Saudi Vision 2030 and the expected role of women in the social and economic development of Saudi Arabia. Second, this study has contributed to the existing body of knowledge and understanding of what institutional barriers and challenges Saudi female entrepreneurs face and how they could be overcome at a national level
Unlocking the potential for thermal energy storage in the UK
Rapid and deep energy system decarbonisation is essential to a safe future. Thermal energy storage may hold the key to significant carbon reduction of the heating, cooling and electricity sectors, but the UK remains largely locked in to a fossil-fuel based heating regime. Global urbanisation trends mean cities are crucial to the net-zero transition. This thesis provides a sociotechnical analysis of current and future thermal storage deployment, recognising that fundamental change is complex and involves individuals and companies, supply chains, infrastructures, markets, policy and regulation, norms and traditions. I explore this through the overarching research question: How can cities unlock the potential for thermal energy storage to support the UKâs net-zero transition?
The work is presented through three empirical chapters. A pilot study used a survey, thematic analysis, and pre-existing sociotechnical frameworks to explore the current state of UK thermal storage deployment and how sociotechnical characteristics are shaping current and future deployment prospects. A case study of a particular storage approach known as geoexchange analyses the results of interviews with geoexchange practitioners using sociotechnical frameworks, and proposes a new critical success factors framework. Finally, a comparative case study of two UK cities explores the specific role of local authorities to use powers at their disposal within a common planning framework to support the deployment of urban shared ground heat exchange in residential and mixed-use developments. Based on this study, a framework for local policy, support and enforcement activities is proposed.
Applied contributions are provided through new knowledge on sociotechnical factors shaping the prospects for TES to support the net-zero transition, the first sociotechnical analysis of UK geoexchange deployment, and policy and practice proposals to support city-based shared ground heat exchange. Theory is advanced through application, testing and development of several existing frameworks for understanding sociotechnical change. Based on empirical evidence, two novel frameworks are proposed to support deployment of geoexchange and shared ground heat exchange
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