scholarly journals Price Stability and Monetary Policy Effectiveness when Nominal Interest Rates are Bounded at Zero

1998 ◽  
Vol 1998 (35) ◽  
pp. 1-54 ◽  
Author(s):  
Athanasios Orphanides ◽  
◽  
Volker W. Wieland
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Price Stability ◽  
Policy Effectiveness ◽  
Nominal Interest Rates ◽  
Monetary Policy Effectiveness

scholarly journals Monetary Policy and Financial Stability

2020 ◽  
Vol 2020 (101) ◽  
pp. 1-36
Author(s):  
Isabel Cairó ◽  
◽  
Jae Sim ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Financial Stability ◽  
Inflation Targeting ◽  
Global Financial Crisis ◽  
Price Stability ◽  
Policy Regimes ◽  
Household Sector ◽  
Nominal Interest Rates ◽  
Credit Cycle

The 2008 Global Financial Crisis called into question the narrow focus on price stability of inflation targeting regimes. This paper studies the relationship between price stability and financial stability by analyzing alternative monetary policy regimes for an economy that experiences endogenous financial crises due to excessive household sector leverage. We reach four conclusions. First, a central bank can improve both price stability and financial stability by adopting an aggressive inflation targeting regime, in the absence of the zero lower bound (ZLB) constraint on nominal interest rates. Second, in the presence of the ZLB constraint, an aggressive inflation targeting regime may undermine both price stability and financial stability. Third, an aggressive price-level targeting regime can improve both price stability and financial stability, regardless of the presence of the ZLB constraint. Finally, a leaning against the wind policy can be detrimental to both price stability and financial stability when the credit cycle is driven by countercyclical household sector leverage. In this environment, leaning with credit spreads can be more effective.

Reference Rates and Monetary Policy Effectiveness in Korea

2015 ◽  
Author(s):  
Heung Soon Jung ◽  
Dong Jin Lee ◽  
Taehyo Gwon ◽  
Se Jin Yun
Keyword(s):  
Monetary Policy ◽  
Policy Effectiveness ◽  
Monetary Policy Effectiveness

scholarly journals Albania's Monetary Policy and the Basic Indicators that Effect the Economic Growth

2019 ◽  
Vol 2 (2) ◽  
pp. 51
Author(s):  
Bernard Balla
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Inflation Rate ◽  
Full Employment ◽  
Price Stability ◽  
Macroeconomic Policies ◽  
Consumer Prices

Macroeconomic policies aim to stabilize the economy by achieving their goal of price stability, full employment and economic growth. Price stability is the responsibility of macroeconomic policies that are developed to maintain a low inflation rate, contribute to the solidity of the domestic product and maintain an exchange rate that can be predictable. The purpose of this paper is to analyze Albania's monetary policy by highlighting the main indicators that can be used as a measurement of the efficiency of this policy in the economic development. The literature review shows that there are many attitudes regarding the factors that need to be taken into consideration when analyzing monetary policies, including the elements of fiscal policies. In the Albanian economy, the prices and the level of inflation are the most important aspects. The Bank of Albania uses the inflation targeting regime, considering that the main indicator of inflationary pressures in the economy is the deviation of inflation forecasted in the medium term by its target level. In numerical terms, the bank intends to maintain its annual growth in consumer prices at the level of 3%. According to the latest reports published by the Bank of Albania in 2019, monetary policy continues to contribute positively to a financial environment with a low interest rate and an annual inflation rate of 2%. Although the inflation rate hit the lowest value of 1.8 % in 2018, a balanced rate was achieved through the reduction of interest rates and risk premiums in financial markets and, more recently, through the tightening of the exchange rate. These monetary conditions are appropriate to support the growth of domestic demand and the strengthening of inflationary pressures.

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