MONETARY BASE AND ACHIEVING ECONOMIC GROWTH IN DIFFERENT COUNTRIES

The main purpose of this study is to find the effect of budget deficit with foreign loans as source of funding on inflation and economic growth. This study focuses on transmission mechanism of budget deficit funding effects on inflation and economic growth. We use a specific simultaneous macroeconomic model which includes 17 behavioral equations and 18 identity equations with 6 blocks in this study, Two Stage Least Square (TSLS) method is employed to estimate the behavioral equations in the model. This study use Indonesia secondary economic data from 1970 to 2003. Econometric tests are performed to produce BLUE estimator. This study also use stochastic simulation with 10000 replications to simulate policy.The results show that using foreign loan to fund budget deficit increases both economic growth and inflation. This result is also supported by the simulation results which show that increase in the proceeds of new foreign loan increases reserves which in turn increase primary money/money supply/monetary base. Interaction of monetary base with money multiplier then increases price level. increase in capital in flow from increase in foreign loan increases government spending which also increases government spending increases in the government spending then add to government capital stock so that economic growth also increases.

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Long-term macroeconomic processes and conditions for economic growth in Russia

Voprosy Ekonomiki ◽

10.32609/0042-8736-2017-1-40-63 ◽

2017 ◽

pp. 40-63 ◽

Cited By ~ 2

Author(s):

V. Manevitch

Keyword(s):

Economic Growth ◽

Consumer Behavior ◽

Monetary Base ◽

Russian Economy ◽

Cyclical Fluctuations ◽

General Government ◽

Monetary Authorities ◽

The One

The article examines long-term macroeconomic processes that have resulted in the stagnation of the Russian economy. Such processes include the reduction of the marginal efficiency of labor and capital in a number of major activities, the distortion of motivation of investors due to multiple undervaluation of the ruble, the decline in the share of savings in the income of non-financial corporations, cyclical fluctuations in consumer behavior. The author connects possible long-term or cyclic substitution of private sources of investment for resources of the general government with controlling the dynamics of the monetary base, which is considered in the article as the endogenous, dependent variable, not the one that is exogenously set by the monetary authorities.

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Polityka pieniężna Europejskiego Banku Centralnego a zagrożenie deflacją w Unii Europejskiej

Kwartalnik Kolegium Ekonomiczno-Społecznego Studia i Prace ◽

10.33119/kkessip.2015.1.3.6 ◽

2015 ◽

Vol 1 (3) ◽

pp. 89-102

Author(s):

Jan L. Bednarczyk

Keyword(s):

Economic Growth ◽

Central Bank ◽

European Central Bank ◽

Policy Tools ◽

Inflation Target ◽

Monetary Base ◽

European Central

The aim of the paper is to assess whether the range of non-standard measuresundertaken by the European Central Bank between 2014–2015 may turn outinsufficient to stimulate demand and overcome deflation. The causes for the presentsituation are the weaknesses of mechanisms transmitting monetary policyimpulses to the economy resulting from: 1) pessimistic expectations withinEurozone regarding economic growth, 2) lack among policy tools of any forwardguidance for the desirable mid-term level of crucial real magnitudes, 3) lack ofsufficient flexibility in the inflation target policy, 4) the weakness of the securitiespurchase programmes which exerted only a temporary effect on the ECB’sbalance sheet and monetary base

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Does Monetary Policy Boost Economic Growth? The Case of Small Open Economy

Research in World Economy ◽

10.5430/rwe.v11n3p216 ◽

2020 ◽

Vol 11 (3) ◽

pp. 216

Author(s):

Javid Aliyev ◽

Shahriyar Mukhtarov ◽

Khanlar Haydarov ◽

Murad Isgandarov

Keyword(s):

Economic Growth ◽

Monetary Policy ◽

Exchange Rate ◽

Open Economy ◽

Small Open Economy ◽

Policy Tools ◽

Integration Methods ◽

Monetary Base ◽

Long Run ◽

The Impact

The main aim of this paper is to investigate the impact of monetary policy tools on economic growth in Azerbaijan during 2005-2018 using the Vector Error Correction Model (VECM). Also, different co-integration methods, namely, Johansen, DOLS, FMOLS and CCR were utilized for the robustness test. The outcomes of the different co-integration methods are consistent with one another and confirm the existence of long-run relationships among variables. Furthermore, the estimation results of VECM show that the monetary base and exchange rate have a positive and statistically significant impact on economic growth in the long-run, while the discount rate is insignificant. The paper concludes that the monetary base and exchange rate should be promoted by policymakers over other monetary policy tools during monetary policy implementation toward stimulating economic growth.

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