scholarly journals THE OPTIMAL MONETARY POLICY INSTRUMENTS: THE CASE OF INDONESIA

2003 ◽  
Vol 5 (3) ◽  
pp. 56-70
Author(s):  
Yoga Affandi
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Inflation Rate ◽  
Policy Instruments ◽  
Primary Objective ◽  
Price Stability ◽  
Optimal Monetary Policy ◽  
Monetary Target

In 1999, the central bank of Indonesia, Bank Indonesia, gained its independence. The new Central Bank Act has established a more explicit foundation for Bank Indonesia’s independence. Firstly, goal independence, in which Bank Indonesia sets its own monetary target. Secondly, instrument independence, in which Bank Indonesia implements various policy instruments to achieve that target. The primary objective of Bank Indonesia (henceforth BI) is to achieve and maintain price stability reflected in a low and stable inflation rate.

An Empirical Analysis of The Effect of Monetary Policy on Inflation in Nigeria; 1970 – 2018

2020 ◽  
Vol 7 (6) ◽  
pp. 841-859
Author(s):  
Nazifi Abdullahi Darma ◽  
Ozovehe Abdulsalami
Keyword(s):  
Time Series ◽  
Monetary Policy ◽  
Central Bank ◽  
Inflation Rate ◽  
Time Series Data ◽  
Policy Instruments ◽  
Series Data ◽  
Price Stability ◽  
Short Run ◽  
Effect Of Monetary Policy

This study empirically analysed the effect of monetary policy on inflation in Nigeria; 1970 – 2018. The objective is to determine the effectiveness of monetary policy instruments on inflation in Nigeria. In doing this, relevant literature was reviewed and theoretical relationship between monetary policy and inflation was established following the quantity theory of money by Irving Fisher. The study employed time series data sourced from the statistical bulletin of Central bank of Nigeria (CBN) 2018. Stationarity test was also conducted on the time series data to determine the order of integration using Augmented Dickey Fuller (ADF) test. The unit root test revealed that inflation rate was stationary at level i.e. I(0) while monetary policy rate, treasury bill rate and cash reserve ratio were stationary at first difference i.e. I(1). The estimated results showed that there is cointegration between monetary policy variables and inflation rate in Nigeria. The results revealed that Monetary Policy Rate (MPR) was statistically significant in the short run after first difference, which indicates that monetary policy rate (MPR) exerts significant effect on inflation in Nigeria in the short run. Based on these findings, the study concluded that monetary policy variables alone are not sufficient enough in maintaining price stability in Nigeria. Therefore, the Federal government, Central Bank of Nigeria (CBN) and policy makers should simultaneously use monetary and fiscal policy instruments to maintain price stability in Nigeria.

Section 6 The European Central Bank

2019 ◽  
Author(s):  
Marcus Klamert ◽  
Manuel Kellerbauer ◽  
Jonathan Tomkin
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
European Central Bank ◽  
Primary Objective ◽  
Price Stability ◽  
European Central

Article 282 provides for the ESCB, consisting of the ECB together with the NCBs (NCBs). Within the ESCB, the Eurosystem, comprised of the ECB and the NCBs of MS whose currency is the euro, conducts the Union’s monetary policy. The primary objective of the ESCB is to maintain price stability. The ECB is charged with authorizing the use of the euro and is independent in all respects.

scholarly journals The price stability oriented monetary policy of the European Central Bank

2010 ◽  
Vol 13 (3) ◽  
pp. 5-15
Author(s):  
Wojciech Gasiński ◽  
Anna Misztal
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
European Central Bank ◽  
Central Banks ◽  
Primary Objective ◽  
Price Stability ◽  
Economic Policies ◽  
European Central ◽  
Consumer Prices ◽  
European System

The aim of this paper is to present the price stability oriented monetary policy of the European Central Bank. The European Central Bank began activities in 1998 and the primary objective of the European System of Central Banks is to maintain price stability and the ESCB should also support the general economic policies in the Community. Monetary policy is a special tool that national governments and central banks uses to influence on its economy, especially to control the supply of money and to influence on the level of economic indicators. This paper investigates the assumed objective of the European System of Central Banks which is to maintain price stability. What is more, we would like to present the monetary policy strategy of the European Central Bank and analysis of the Harmonized Index of Consumer Prices.

Trust, But Verify: The Road Ahead

2017 ◽  
Author(s):  
Pierre L. Siklos
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Policy Instruments ◽  
Central Banks ◽  
Central Banking ◽  
Price Stability ◽  
The Road ◽  
The Past ◽  
Economic Downturns ◽  
More Care

Taking stock of the past fifteen years in monetary policy leads to some conclusions and suggestions for reform. Contrary to the claims of some observers, price stability remains an unassailable goal of central banks. Reforms are needed in their governance, however. In particular, legislation ought to include more directives to make clear the conditional relationship between government and the central bank. Unconventional central bank policies are no longer so unconventional. While they should be included in the toolkit of policy instruments, they should be used with more care. Some central banks have overreached and have confused the need to put a floor on economic downturns with the need for economic growth to rise to levels deemed normal. Data dependence as a policy stance reflects one of the biggest failures of central banking. After more than a decade of explaining the forward-looking nature of monetary policy, a backward-looking perspective seems to dominate policy discussions.

The ECB Strategy and Its Critics

2021 ◽  
pp. 58-100
Author(s):  
Massimo Rostagno ◽  
Carlo Altavilla ◽  
Giacomo Carboni ◽  
Wolfgang Lemke ◽  
Roberto Motto ◽  
...  
Keyword(s):  
Monetary Policy ◽  
Inflation Targeting ◽  
Inflation Rate ◽  
Primary Objective ◽  
Price Stability ◽  
Governing Council ◽  
Policy Strategy ◽  
European Central ◽  
The Eu

While the EU Treaty established the European Central Bank’s (ECB) primary objective as price stability, defining price stability was left to the ECB’s Governing Council (GC). This chapter shows how the GC chose to formulate an objective that subtly but consciously differed from the standard inflation targeting framework of the time. Rather than expressing a preference for a particular rate of inflation, a ‘target’ that could be changed if circumstances changed, it opted to qualify price stability unconditionally as an inflation rate below 2%. We explain some of the factors behind this decision and describe the process whereby, already in 2003, the ECB’s monetary policy strategy came to be reviewed. The internal debates that informed the ECB’s characteristic ‘below but close to 2%’ objective and ‘two pillar’ strategy are discussed. The chapter also focuses on the ECB’s early critics.

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.

scholarly journals THE ROLE OF THE CENTRAL BANK IN THE FUNCTION OF IMPROVEMENT OF LIQUIDITY OF BANKING SECTOR IN BOSNIA AND HERZEGOVINA

2019 ◽  
Vol 12 (24) ◽  
Author(s):  
Goran Mitrović ◽  
Živko Erceg
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Bosnia And Herzegovina ◽  
Banking Sector ◽  
Banking System ◽  
Policy Instruments ◽  
Foreign Banks ◽  
Dayton Agreement ◽  
The Impact

The monetary policy of Bosnia andHerzegovina is rather limited because it is basedon the principles of a currency boardcharacterized by the impossibility of implementingthe basic monetary policy instruments incomparison with the monetary policy of theEuropean Union. However, the constant presenceof European integrations should point the need fora more drastic change in the monetary policy ofBosnia and Herzegovina. By entering theEuropean Monetary Union (EMU), the monetaryterritory of Bosnia and Herzegovina will becomeone of the branches of the European Central Bank(ECB). In addition, it is not difficult to concludewhy the Law about the Central Bank of Bosnia andHerzegovina has been adopted with the first lawsof the Dayton Agreement, if it is known that thelargest part of the banking system, and thereforethe financial market, is owned by foreign banks.This work will point out the significance of theCentral Bank of Bosnia and Herzegovina, as oneof the most important factors for maintaining thepermanent liquidity of the banking sector inBosnia and Herzegovina. The possibilities andlimitations of the Central Bank of Bosnia andHerzegovina will be determined, with theassumption of macroeconomic sustainability overa longer period of time. The need of reforming thebanking system in Bosnia and Herzegovina will beanalyzed through the constant implementation ofthe Basel standards with the increasingparticipation of foreign banks in the Bosnia andHerzegovina. It will be determined the impact ofthe implementation of the Basel III in the bankingindustry in Bosnia and Herzegovina and itsconsequences on the banking and economicsystem.models, on the ways of financing theelimination of adverse consequences of naturaldisasters.

Analysis of the Analytical Balance Sheet of Central Bank of Republic of Turkey During 2000 - 2009 Period in Terms of Crises

2014 ◽  
pp. 1284-1302
Author(s):  
Yıldız Özkök
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Balance Sheet ◽  
Central Banks ◽  
Money Market ◽  
Price Stability ◽  
Primary Target ◽  
Monetary Aggregates ◽  
Analytical Balance ◽  
Republic Of Turkey

Today, Central Banks' primary target is to maintain the price stability. In that context, through their monetary policy, they intervene in the money market with different tools. The Analytical Balance Sheet was created upon summing up and offsetting Balance Sheet of the Central Bank of Republic of Turkey (CBRT) in order to represent specific monetary aggregates. By means of that, CBRT aims to make the balance sheet more understandable and simple. In this chapter, firstly the sub items of the Analytical Balance Sheet are explained; secondly, the economic crises of Turkey during 2000-2009 is mentioned; finally, effects of these crises on the CBRT's Analytical Balance Sheet, changes in monetary aggregates which are Currency Issued, Reserve Money, Monetary Base, and Central Bank's Money, and in this context structure of the monetary policy of the CBRT in this period is analyzed.

scholarly journals Optimal Monetary Policy when Information is Market-Generated

2020 ◽  
Vol 130 (628) ◽  
pp. 956-975 ◽  
Author(s):  
Kenza Benhima ◽  
Isabella Blengini
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Optimal Policy ◽  
Labour Supply ◽  
Limited Attention ◽  
Optimal Monetary Policy ◽  
The Public ◽  
Supply Shocks ◽  
Individual Demand ◽  
Real Shocks

Abstract The nature of the private sector’s information changes the optimal conduct of monetary policy. When firms observe their individual demand and use it as a signal of real shocks, the optimal policy consists in maximising the information content of that signal. When real shocks are deflationary (like labour supply shocks), the optimal policy is countercyclical and magnifies price movements, which contrasts with the exogenous information case, where optimal monetary policy is procyclical and stabilises prices. When the central bank communicates its information to the public, this policy is still optimal if firms pay limited attention to central bank announcements.

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