New moves will not ease confidence crisis in Argentina

2018 ◽  
Keyword(s):  
At Risk ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Financial Crisis ◽  
Sovereign Default ◽  
Content Type ◽  
Fiscal Adjustment ◽  
Social Protests ◽  
The Government ◽  
Fiscal And Monetary Policy

Significance The moves followed a peso depreciation of nearly 21% during the last week of August. The measures aim to ease investor doubts over the government’s ability to overcome the financial crisis given its political weakness, different viewpoints within the economic team and its erratic fiscal and monetary policy. The IMF is expected to confirm that it will release the funds necessary to avoid a possible new sovereign default. Impacts Exchange rate weakness will drive inflation, while the fiscal adjustment will boost unemployment and deepen the recession. Early IMF disbursements will ease concerns for 2019, but doubts will surge if the government fails to achieve ambitious fiscal targets. Social protests will escalate, possibly putting governability at risk.

Monetary tightening carries high cost in Argentina

2018 ◽  
Keyword(s):  
Exchange Rate ◽  
Current Account Deficit ◽  
Public Spending ◽  
Medium Term ◽  
Content Type ◽  
Financial Volatility ◽  
Fiscal Adjustment ◽  
Debt Default ◽  
Floating Exchange Rate ◽  
The Government

Significance Despite its commitment to a floating exchange rate, the government has been forced to prioritise exchange rate stabilisation. After the change of Central Bank (BCRA) authorities in mid-June failed to stop the latest currency run, the government further tightened monetary policy. Aiming to alleviate fears of a new medium-term debt default, the government is emphasising its commitment to fiscal adjustment, even including the possibility of new taxes, which runs counter to efforts to reduce tax pressure. Impacts Interest rate rises and closer control of monetary aggregates may prompt a recession. Depreciation will help to reduce the current account deficit in 2018 but will worsen debt indicators. Growing political uncertainty and difficulty in cutting public spending will sustain financial volatility.

Currency controls will not curb crisis in Argentina

2019 ◽  
Keyword(s):  
Financial Crisis ◽  
Debt Crisis ◽  
Social Indicators ◽  
Political Transition ◽  
The Political ◽  
Short Term ◽  
Content Type ◽  
Reform Agenda ◽  
Fiscal Adjustment ◽  
The Government

Significance The surprisingly ample victory of opposition candidate Alberto Fernandez over President Mauricio Macri in the August 11 presidential primaries triggered a currency run and a sharp fall in international reserves and led the government to announce a “voluntary reprofiling” of short-term debt. The announcement was interpreted as a default, worsening investor expectations. The debt crisis puts the political transition at stake, with nearly two months before the general election and over three months until a new administration takes office in December. Impacts Following a new debt crisis, capital markets will be closed, forcing a sharper fiscal adjustment. The financial crisis will delay any economic rebound and worsen social indicators. The fragile fiscal situation will inhibit implementation of any ‘populist’ measures by the new government. The structural reform agenda will make some progress, though more slowly than expected.

scholarly journals Coordination of state fiscal and monetary policy the in the context of post-conflict recovery

2017 ◽  
Vol 1 (2) ◽  
pp. 19-28 ◽  
Author(s):  
Andrii Polchanov
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rates ◽  
Gradual Transition ◽  
Public Expenditures ◽  
Foreign Direct Investments ◽  
Post Conflict ◽  
The World ◽  
The Government ◽  
Fiscal And Monetary Policy

The article is devoted to the study of fiscal and monetary components of state`s financial policy and their coordination after the completion of hostilities. The urgency of the topic is determined by the need to find an optimal (in terms of economic system) strategy of interaction between the government and the central bank in the conditions of post-conflict recovery. The purpose of the article is to summarize the world experience of formation of fiscal and monetary policy as well as their coordination in order to effectively overcome the consequences of military conflicts. The author analyzes the data on the post-war development of 12 countries that succeeded in restoring their national economies during the first decade after the end of hostilities (Angola, Cambodia, the Republic of Congo, Croatia, Georgia, Indonesia, Liberia, Macedonia, Serbia, Sierra Leone, Solomon Islands, Tajikistan) As a result, the author discovers a gradual transition from the fixed and regulated exchange rate regime to the floating exchange rate in the long-term perspective, reduction of inflation and interest rates on loans, as well as a gradual increase of GDP and the net inflow of foreign direct investments, while the share of tax revenues and public expenditures in GDP remained stable. On the basis of generalization of the world experience the conclusion was made about the key role of central banks in ensuring economic growth in the context of post-conflict recovery by ensuring price stability and stimulating lending. In addition, the importance of geographic location and availability of natural resources in the restoration of the national economy of some countries was emphasized.

Fiscal dangers loom over Taiwan

2016 ◽  
Keyword(s):  
Monetary Policy ◽  
Fiscal Policy ◽  
Financial Crisis ◽  
Private Consumption ◽  
Global Financial Crisis ◽  
Business Owners ◽  
Gdp Growth ◽  
Private Business ◽  
Content Type ◽  
Fiscal Adjustment

Subject Taiwan's deteriorating fiscal situation. Significance Taiwan's GDP growth has been below 1% since early 2015 -- a marked slowdown since before the 2008-09 global financial crisis, when rates in excess of 5% were normal. Yet the centre-left government of President Tsai Ing-wen, which took office in May, is sticking to a conservative fiscal policy. Impacts Government debt will increase further, but is far from reaching crisis-prone levels. Taiwan's debt is internal, so it can be digested by either fiscal adjustment or monetary policy. Planned tax increases to cope with growing fiscal expenditure will discourage private consumption and investment. More private business owners will relocate their wealth overseas where taxes are lower.

Sonko protests will embolden Senegal’s opposition

2021 ◽  
Keyword(s):  
At Risk ◽  
Content Type ◽  
Targeted Attacks ◽  
The Government ◽  
Public Disorder ◽  
Unemployed Youth ◽  
Roll Out

Significance He had been arrested for disrupting public disorder and attending an illegal demonstration after protests erupted as he responded to a court summons concerning rape allegations. His arrest and detention has triggered wider unrest and a public backlash against President Macky Sall and his government. Impacts Sall will increase budgetary spending to try to appease the growing numbers of unemployed youth. Deep public mistrust of the government could hamper COVID-19 vaccine roll-out. With anti-French sentiment increasing, French businesses will be at risk of further targeted attacks during protests.

Sukuk and monetary policy transmission in Indonesia: the role of asset price and exchange rate channels

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Suriani Suriani ◽  
M. Shabri Abd. Majid ◽  
Raja Masbar ◽  
Nazaruddin A. Wahid ◽  
Abdul Ghafar Ismail
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rates ◽  
Asset Price ◽  
Transmission Mechanism ◽  
Monetary Policy Transmission ◽  
Content Type ◽  
Policy Transmission ◽  
Monetary Policy Transmission Mechanism

Purpose The purpose of this study is to empirically analyze the role of sukuk in the monetary policy transmission mechanism through the asset price and exchange rate channels in the Indonesian economy. Design/methodology/approach Using the monthly data from January 2003 to November 2017, this study uses a multivariate vector error correction model causality framework. To examine the role of sukuk in the monetary policy transmission mechanism through the asset price channel, this study uses the variables of consumption, inflation, interest rates, economic growth and the composite stock price index. Meanwhile, to examine the role of sukuk in the monetary policy transmission mechanism through the exchange rate channel, this study used variables of inflation, interest rates, economic growth, foreign investment and exchange rate. Findings This study documented that sukuk has no causal relationship with inflation through asset price and exchange rate channels. Nevertheless, sukuk has a bidirectional causal relationship with economic growth through asset price and exchange rate channels. Sukuk is also documented to have a causal relationship with monetary policy variables of interest rate and stock prices through asset price and exchange rate channels. Finally, a unidirectional causality is recorded running from the exchange rate to sukuk in the exchange rate channel. Research limitations/implications The finding of independence of the sukuk market from interest rates provides evidence that the trading of the sukuk in Indonesia has been in harmony with the Islamic tenets. Practical implications The relevant Indonesian authorities need to enhance both domestic and global sukuk markets as part of efforts to promote the sustainability of Islamic capital market development in Indonesia. Originality/value To the best of the authors’ knowledge, this study is among the first attempts to empirically investigate the role of sukuk in monetary policy transmission through asset price and exchange rate channels in the context of the Indonesian economy.

AZƏRBAYCAN RESPUBLİKASININ MONETAR SİYASƏTİ

2020 ◽  
Vol 54 (05) ◽  
pp. 103-106
Author(s):  
Kamil Sayavush Demirli ◽  
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Financial Crisis ◽  
Central Bank ◽  
Key Words

Key words: finance, monetary policy Central Bank exchange rate economy financial crisis

Optimal fiscal and monetary policy under different fiscal instruments

2020 ◽  
Vol 48 (1) ◽  
pp. 167-190
Author(s):  
Mehrab Kiarsi
Keyword(s):  
Monetary Policy ◽  
Inflation Rate ◽  
Dynamic Properties ◽  
Sticky Prices ◽  
New Keynesian ◽  
Content Type ◽  
Friedman Rule ◽  
Keynesian Model ◽  
Fiscal And Monetary Policy ◽  
Cash In Advance

PurposeThe paper includes characterizing Ramsey policy in a cash-in-advance monetary model, under flexible and sticky prices, and with different fiscal instruments.Design/methodology/approachThe paper analytically and numerically characterizes the dynamic properties of Ramsey allocations. The author computes dynamics by solving second-order approximations to the Ramsey planner’s policy functions around a non-stochastic Ramsey steady state.FindingsThe Friedman rule is not mainly optimal in a cash-in-advance model with distorting taxes. The Ramsey-optimal policy with both taxes on income and consumption calls for a high inflation rate that is extremely volatile, despite the fact that changing prices is costly.Practical implicationsThe optimality of zero nominal interest rate under flexible prices in monetary models is not mainly the case and quite depends on the preferences. The optimality of a zero inflation rate under sticky prices also very much depends on the assumed set of fiscal instruments.Originality/valueThe non-optimality of the Friedman rule under flexible prices is quite new. Moreover, studying the optimal fiscal and monetary policy in a New Keynesian model with a rich set of fiscal instruments is also quite original.

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