Economics Commons^™

Lessons Learned: William Nelson, Sandra Ward

Journal of Financial Crises

William Nelson was deputy director, Division of Monetary Affairs, at the Federal Reserve Board during the Global Financial Crisis of 2007–09 (GFC). As the nation’s central bank, chief financial regulator, and lender of last resort, the Federal Reserve Board took the lead in setting monetary policy and stabilizing the financial system during the crisis.

Nelson’s responsibilities at the Fed during the crisis included analysis of monetary policy and discount window policy as well as financial institution supervision, and he regularly briefed the board and the Federal Open Market Committee. He developed special expertise in designing liquidity facilities and was a …

U.S. Monetary Policy And The Decline In The Interest Rates (1990-2007), Santiago Capraro, Carlo Panico, Luis Daniel Torres-González

PERI Working Papers

Interest rates in the US and in other countries have experienced persistent and generalised declines since the 1980s. The main interpretations of this phenomenon ignore the role of monetary factors, such as financial and monetary policy. The essay proposes an alternative interpretation based on the choice of the Federal Reserve (FED) to conduct monetary policy by attributing high priority to financial stability. The interaction between changes in financial regulation, the transformation of "specialized" into "universal” banking, and the concern with financial instability have led the central bank to add to the role of "lender of last resort" that of "lender …

Essays On Bitcoin And Cryptocurrencies, Jiasong Wu

Dissertations

Bitcoin and cryptocurrencies, invented as potential digital international currencies, have gradually drawn more and more attention since their birth. The growing popularity of cryptocurrencies in the past decade and the recent acceptance of Bitcoin as legal tender in El Salvador suggests that there is growing acceptance of these instruments and that cryptocurrencies are here to stay. Among these cryptocurrencies, Bitcoin has a unique place being the first and most well-known cryptocurrency in terms of price, market capitalization, and trading volume.

The first two essays of this dissertation focus on Bitcoin and the third essay focuses on the cryptocurrency market in …

The Nature Of Money And The Theory Of International Trade: Thornton And Ricardo, Isabella Weber

PERI Working Papers

A rich recent literature reinvestigates the nature of money, but little attention has been paid to the ramifications of the ways in which we theorize money for the theory of international trade.This paper examines the logical relationship between the neutrality of money and selfbalancing trade based on Henry Thornton and David Ricardo as two foundational contributions to credit and commodity money theories respectively. I show that both authors theorize trade as self-balancing whenever money is conceptualized as neutral. I distinguish two notions of the neutrality of money: ex ante and ex post neutrality. In Thornton’s Paper Credit money is not …

The Nature Of Money And The Theory Of International Trade: Thornton And Ricardo, Isabella Weber

PERI Working Papers

A rich recent literature reinvestigates the nature of money, but little attention has been paid to the ramifications of the ways in which we theorize money for the theory of international trade. This paper examines the logical relationship between the neutrality of money and self- balancing trade based on Henry Thornton and David Ricardo as two foundational contributions to credit and commodity money theories respectively. I show that both authors theorize trade as self-balancing whenever money is conceptualized as neutral. I distinguish two notions of the neutrality of money: ex ante and ex post neutrality. In Thornton’s Paper Credit money …

Pass-Through Effects Of Standing Facilities On Bank Interest Rates In Nigeria, Victor Ezeora Eleam, Chinyelu Gloria Ekwom, Chibueze Charles Ariolu, Chukwubuzo Jackson Umebali, Adewale Timothy Balogun

Economic and Financial Review

The paper investigates the pattern of pass-through effects of standing facilities rates on commercial bank retail interest rates in Nigeria. Monthly data spanning 2007:06 to 2019:12 and the Gregory-Hansen cointegration method that accounts for structural breaks are used in the empirical analysis. The adjustment parameters for the standing deposit and lending facilities are found to be significant, but with a low speed of adjustment. This provides some evidence on the nature of the interest rate channel of monetary policy transmission in the country. Furthermore, the study could not confirm asymmetry in the adjustment of retail rates to their long-run equilibria. …

Asymmetric Trade Flows, Monetary And Business Cycle Asynchronization Among Ecowas Member Countries: Feasibility Of Ecowas Monetary Union Formation Beyond 2020, Joseph Okwori, Walter O. Ugwuoke

Bullion

The formation of the West African Monetary Union which was initially slated for 2003 was postponed severally in 2005, 2009, 2015 and 2020. This raises the curiosity of investigating the possibility of its formation beyond 2020. It is against this backdrop that this paper investigated asymmetric trade flows, monetary policy and business cycle asynchronization among ECOWAS member countries: Feasibility of ECOWAS Monetary union formation beyond 2020. The objective was addressed using Pearson correlation analysis on computed zscores and the seemingly unrelated regression estimation (SURE). The finding shows that the flow of trade within ECOWAS member countries were highly asymmetric indicating …

Achieving Price Stability, Hwee Kwan Chow, Taojun Xie

Research Collection School Of Economics

The aim of delivering medium-term price stability is the stated objective of the Monetary Authority of Singapore. To this end, the central bank adopted an unusual exchange rate–based monetary policy framework that has served the economy well over the past decades. However, the shift from the phase of catch-up growth to a mature economy raises the question of whether the current monetary policy framework needs reformulation. Moreover, as global financial integration deepens, surges in cross-border capital flows impact Singapore’s exchange rate and asset prices, which has implications for economic dynamism and inclusion. Since a large and persistent deviation of the …

Skbi Big 5 Survey 2021 August, Singapore Management University

Sim Kee Boon Institute for Financial Economics

The latest survey results convey an upshift in growth projections of the five largest economies in aggregate accompanied by higher inflation, especially this year and to a lesser extent next year. The aggregate “Big5” median real GDP growth projections for 2021 and 2022 were raised to 6.7% (up in US, CN and EA but down in IN and JP) and 4.9% (all except US), respectively. The overall “Big5” median CPI inflation forecasts were nudged up to 2.6% (higher in US, IN and EA but lower in CN) and 2.4% (in US, IN and EA some), respectively, for this year and …

Monetary Policy Surprises, Stock Returns, And Financial And Liquidity Constraints, In An Exchange Rate Monetary Policy System, John M. Sequeira

Research Collection Lee Kong Chian School Of Business

This study examines the impact of monetary policy surprises on the stock price behaviour of a small developed economy, whose monetary policy is based on the exchange rate. We find that monetary policy surprises associated with all contractionary policy levers and a neutral policy lever, have a consistently significant and negative impact on stock returns. In comparison, only monetary policy surprises associated with a downward re-centering policy lever, has a significantly positive effect on stock returns. Using a recalibrated classification system, we also find that monetary policy surprises differ across sectors of the economy. Our results show how monetary policy …

The Nigerian Economy, Monetary Policy And Covid-19: An Unholy Trinity, Polycarp Ishaku Mikloda Ph.D

Bullion

This article presents the dynamics of an unholy trinity involving the interplay of economic forces in the thick of a crippling health crisis with monetary policy to the rescue through activation of relevant instruments. In response to the outbreak, the Monetary Policy Committee announced several policy measures which include granting of extension of loan moratorium on principal repayments, interest rate reduction on all intervention loan facilities from 9% to 5%, establishment of a N50bn targeted credit facility to household and MSMEs and regulatory forbearance to banks and credit support to the healthcare industry among others. it is worthy to state …

Capital Allocation Imbalance And The Effects On Monetary Policy, Peter G. George

Doctoral Dissertations (DBA)

This paper examines the association between liquidity injections and capital allocations in the United States. In the analysis, liquidity injections are proxied by monetary base and the capital allocations are reflected by excess reserves, vault cash, total bank credit, and M2-M1. Monthly data are utilized for all variables for the sample period March 1984 – June 2020. Four Bai-Perron multiple breakpoint regressions and Markov switching estimations are employed to examine changeable patterns and interactions. The results indicate that liquidity injections are imbalanced and are allocated to total bank credit prior to quantitative easing, excess reserves prior to QE through post-QE, …

Skbi Big 5 Survey 2021 February, Singapore Management University

Sim Kee Boon Institute for Financial Economics

The latest survey results suggest that the five largest economies collectively is projected to snapback to almost 6% in 2021, a modest upgrade from the August median, following an unprecedented preliminary contraction of roughly 4% last year (in real GDP terms). The 2022 median growth forecast of slightly above 4.5%, while slower, is still respectable, outstripping its pre-COVID 10-year average pace by more than half a percentage point. The aggregate upgrade in 2021, however, obscures the lopsided nature and highly uneven contour of the ongoing recovery. The bulk of the upward revision to growth was mainly due to IN (to …

Monetization Of Fiscal Deficits And Covid-19: A Primer, Aidan Lawson, Greg Feldberg

Journal of Financial Crises

Monetization—also known as “money-financed fiscal programs” or “money-printing”—occurs when a government finances itself by issuing currency or other non-interest-bearing liabilities, such as bank reserves. It poses real risks—potentially excessive inflation and encroachment on central-bank independence—and some paint it as a relic of a bygone era. The onset of the COVID-19 crisis, however, forced governments to spend heavily to combat the considerable economic and public health impacts. As government deficits climbed, monetization re-entered the conversation as a way to avoid the massive debt burdens that some nations may face. This paper describes how monetization works, provides key historical examples, and examines …

The Nature Of Money And The Theory Of International Trade: Thornton And Ricardo, Isabella M. Weber

Economics Department Working Paper Series

A rich recent literature reinvestigates the nature of money, but little attention has been paid to the ramifications of the ways in which we theorize money for the theory of international trade. This paper examines the logical relationship between the neutrality of money and self-balancing trade based on Henry Thornton and David Ricardo as two foundational contributions to credit and commodity money theories respectively. I show that both authors theorize trade as self-balancing whenever money is conceptualized as neutral. I distinguish two notions of the neutrality of money: ex ante and ex post neutrality. In Thornton’s Paper Credit money is …

The Neoclassical Theory Of Aggregate Investment And Its Criticisms, Daniele Girardi

Economics Department Working Paper Series

This paper surveys the neoclassical theory of aggregate investment and its criticisms. We identify four main strands in neoclassical investment theory: (i) the traditional Wicksellian model; (ii) the Fisherian ‘array-of-opportunities’ approach; (iii) the Jorgensonian model; (iv) the now prevailing adjustment cost models. We summarize each approach, discuss the main conceptual issues, and highlight similarities and differences between them. We also provide a systematic summary and discussion of the main criticisms that have been leveled at each of these models and highlight some unresolved theoretical issues.

Interest On Reserves In A Partial Two-Sector Banking Model, Shawn A. Osell

Graduate Research Theses & Dissertations

The Federal Reserve implemented a new monetary tool policy as it simultaneously conducted the first round of quantitative easing in 2008. At that time, the Fed began paying interest on a commercial bank's required and excess reserves in order to prevent the federal funds rate from falling to zero. Before quantitative easing, reserves were scarce enough for the federal funds rate to be determined by the supply and the demand for reserves. Consequently, the Fed would use open market operations to manipulate the federal funds rate, and thereby influence other market interest rates. When the Federal Open Market Committee decided …

The Predictive Power Of The Term Structure Under Unconventional Monetary Policies, Luying Yang

Honors Theses

Previous research has confirmed a positive relationship between the slope of the yield spread and future economic growth. Since the start of the Great Recession, a number of developed economies have hit the zero lower bound and adopted unconventional monetary policies such as large-scale bond/asset purchase programs and negative interest rate policies. This paper finds that the yield spread’s predictive power generally deteriorates after the central bank adopts its first bond purchase program. However, there is no general pattern of how these unconventional monetary policies impact the yield spread’s forecasting ability across countries.

Gambling Autonomy: The Impact Of Latin American Central Bank Independence On Risk Aversion Within Monetary Policy Implementation, Julia Duarte Schulman

CMC Senior Theses

This paper examines the effect of Latin American central bank independence (CBI) on risk-averse behaviors in monetary policy. Using a fixed effects panel regression, I document how multiple forms of monetary policy are influenced by different macroeconomic variables, conflicting policy targets and central bank independence benchmarks. The results show that increasing CBI has a positive impact on risk aversion, especially in policies targeting inflation and money supply. Additionally, the results show that interest rates and reserve requirements were especially susceptible to changes in independence, while the monetary base and volume of domestic credit were less influenced. Finally, as time and …