Achieving Price Stability in Nigeria: Monetary Policy Rate Approach vs. Foreign Exchange Policy Approach

2013 ◽  
Author(s):  
Jimoh Ezekiel Oseni
Keyword(s):  
Monetary Policy ◽  
Foreign Exchange ◽  
Price Stability ◽  
Exchange Policy

scholarly journals REFLEXIONES Y PERSPECTIVAS A 25 AÑOS DE LA AUTONOMÍA DEL BANCO DE MÉXICO

2019 ◽  
Vol 78 (310) ◽  
pp. 11 ◽  
Author(s):  
Jonathan Heath ◽  
Jaime Acosta Margain
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Foreign Exchange ◽  
International Reserve ◽  
Policy Framework ◽  
Price Stability ◽  
Reserve Management ◽  
Exchange Policy ◽  
Communication Policies ◽  
Monetary Policy Framework

<p>En este artículo se hace una serie de reflexiones sobre los retos y logros que el Banco de México ha enfrentado en sus primeros 25 años de vida autónoma. Se detallan los elementos claves en el diseño institucional para el cumplimiento de su mandato prioritario: la estabilidad del poder adquisitivo de la moneda. En particular, se destaca la evolución de los cambios en el régimen monetario y en la instrumentación de la política monetaria para alcanzar ese fin. De igual manera, se comentan otros aspectos que han sido relevantes en este periodo de la vida autónoma del banco central, tales como la política cambiaria, el manejo de las reservas internacionales, así como la política de rendición de cuentas y la estrategia de comunicación.<br /><br /></p><p>REFLECTIONS AND PERSPECTIVES AT 25 YEARS OF THE AUTONOMY OF THE BANCO DE MÉXICO</p><p><br /><strong>ABSTRACT</strong><br />This paper describes the challenges and achievements that Banco de México has faced during its first twenty-five years of autonomy. The paper offers some insights about key institutional features that were decisive in fulfilling the central bank’s main mandate: Price stability. The article also outlines the evolution of the monetary policy framework and the central bank operations in order to achieve the central bank main goal. Similarly, other elements such as foreign exchange policy, international reserve management, accountability and communication policies are also discussed.</p>

Capital Control and Monetary Policy in Asian Emerging Market Economies

2018 ◽  
Vol 17 (2) ◽  
pp. 111-134
Author(s):  
Yongseung Jung ◽  
Soyoung Kim ◽  
Doo Yong Yang
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Labor Market ◽  
Foreign Exchange ◽  
Exchange Rate Regime ◽  
Emerging Market ◽  
Elasticity Of Substitution ◽  
Price Stability ◽  
Emerging Market Economies ◽  
Capital Control

This paper explores two policy options in emerging market economies (EMEs) to cope with volatile capital flows due to external monetary policy shocks; capital control policy and choice of exchange rate regime. Both tools reinforce each other when a foreign exchange risk premium shock hits the economy. A contractionary U.S. monetary policy shock has significant real effects in EMEs. Conventional wisdom tells us that a free floating exchange rate with inflation targeting is better when a country faces foreign shocks. However, we show that a flexible exchange rate with less capital controls is not the best option in EMEs based on vector autoregression analysis. Moreover, we set up a small open economy new Keynesian model with real wage and price rigidities. It shows that the small economy with labor market frictions is more vulnerable to exogenous shocks such as a foreign exchange rate shock under a fixed exchange rate regime than under a flexible exchange regime. We show that maintaining price stability is not desirable when there are substantial frictions in the labor market and the intratemporal elasticity of substitution is high. Finally, the model shows that the welfare cost difference between a policy of maintaining purchasing power and a policy aimed at price stability reverses as the intratemporal elasticity of substitution between home and foreign goods increases.

Achieving Price Stability in Nigeria: Monetary Policy Rate Approach vs. Foreign Exchange Policy Approach

2013 ◽  
Vol 03 (02) ◽  
pp. 32-43
Author(s):  
Ezekiel Oseni
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Foreign Exchange ◽  
Developing Economies ◽  
Price Stability ◽  
Economic Activities ◽  
Exogenous Factor ◽  
Monetary Policies ◽  
Goods And Services ◽  
The Impact

Earlier studies have reached a consensus that monetary policies generate more economic activities than fiscal policies in developing economies. This study has bridged the existing gaps in earlier studies by addressing the question of which of the instruments of macroeconomics is more effective in achieving price stability remains largely unanswered. The study observed that the presence of exogenous factor was responsible for the inability of the tight monetary policies of the CBN to mob excess liquidity from the economy. In the same vein, the exogenous factor destabilizes the steady economic growth that would have emanated from a relaxed monetary policy. The study also found foreign exchange rates (fx) to be a more effective instrument to achieving price stability than monetary policy rates (mpr). The Nigerian economy is largely import dependent with most of the importation being consumable goods and services and less of productive (capital) goods. The impact of changes in fx are more pronounced on the economy than changes in the interest rates. The attainment of price stability would become feasible if the apex bank accords priority to the formulation and deployment of foreign exchange policies that are sound in principle and effective in practice.

scholarly journals Monetary policy effect in an economy with heavily managed exchange rate

2017 ◽  
Vol 24 (02) ◽  
pp. 31-50
Author(s):  
Trung Bui Thanh
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Foreign Exchange ◽  
Primary Objective ◽  
Change Rate ◽  
Policy Effect ◽  
Monetary Authorities ◽  
Exchange Policy ◽  
Monetary Policy Shock ◽  
Effect Of Monetary Policy

The primary objective of this paper is to investigate the effect of monetary policy on macroeconomic variables in Vietnam, which is a small, open, and developing economy with heavily managed ex-change rate. Monetary policy shock is identified by the sign re-striction methodology. Unlike previous studies, this paper identifies a monetary contraction by a combination of an increase in interest rates, a decrease in central bank credit, a drop in the stock of foreign exchange reserves, and a fall in broad money. The empirical results show that output and prices begin to reduce after a restrictive mone-tary shock in the medium term, suggesting the adverse effect of monetary policy in the short term and the necessity to improve the transparency of monetary setting. Meanwhile, exchange rates are unresponsive to a tightening decision, which is not a sign of puzzle but plausible when the nature of a peg regime is taken into account. Furthermore, foreign exchange policy causes inflation to rise since its effect is partially sterilized by changes in monetary policy instru-ments. Therefore, Vietnamese monetary authorities should consider a shift toward a more floating regime to achieve monetary inde-pendence or foster the development of financial markets in order to alleviate inflationary pressure caused by foreign exchange policy.

scholarly journals Valuutakontrolli rakendamine Eestis 1930. aastatel [Abstract: Implementation of exchange control in Estonia in the 1930s]

2017 ◽  
pp. 79
Author(s):  
Karl Stern
Keyword(s):  
Monetary Policy ◽  
Foreign Exchange ◽  
Trade Balance ◽  
Foreign Currency ◽  
Course Of Action ◽  
Negative Effect ◽  
National Bank ◽  
Exchange Policy ◽  
Almost All ◽  
Exchange Control

Exchange control is generally managed by the national bank. Exporters have to transfer all of their earnings from foreign exchange to the national bank. The national bank considers different factors in redistributing foreign exchange among importers. After the devaluation of the British pound in the autumn of 1931, cash cover for Estonia’s currency decreased rapidly. The leaders of monetary policy ignored the statutes of the National Bank of Estonia and urgently decided to implement exchange control. The implementation of exchange control did not go very smoothly during its first years. Hurried implementation and lack of preceding explanation caused problems for entrepreneurs and citizens who were in need of foreign exchange. At first there was a great deal of dissension between the National Bank of Estonia and the Ministry of Economic Affairs. The ministry issued import licenses to importers but often the National Bank did not want to sell them any foreign currency (to be used to pay for goods) regardless of their legitimate licenses. The bank’s rationale for this course of action was the low level of cash cover for Estonia’s currency. This fact confirms the opinion prevalent in previous historiography that in its first years, exchange control was implemented for monetary policy purposes. Exchange control influenced almost everybody who needed to use foreign currency. Reasons had to be given even for the purchase of smaller amounts of foreign exchange. After the devaluation of Estonia’s currency in the summer of 1933, exchange control was used to protect the interests of Estonian foreign trade. The Ministry of Economic Affairs and the National Bank started collaborating more efficiently. National Bank Exchange Commission decisions approving exchange applications demonstrate this as well. The commission accepted almost all applications for foreign exchange after the devaluation. The number of applications nearly doubled during the second half of the 1930s. Cash cover for Estonia’s currency increased and the National Bank’s exchange policy became more liberal. After the devaluation, one of the important criteria for giving foreign exchange to importers was the trade balance between the source country and Estonia. Preference was given to traders who imported goods from countries with which Estonia had a positive trade balance. Comparison of export and import in the 1930s shows that in general, Estonia managed to maintain its trade balance. At the same time, exchange control had a negative effect on incentives. In countries where exchange control was implemented, trade volume recovered more slowly in the latter half of the 1930s than in countries where it was not implemented.

Actual Problems of Economic Policy

2003 ◽  
pp. 23-38 ◽  
Author(s):  
M. Ershov
Keyword(s):  
Economic Growth ◽  
Economic Policy ◽  
Foreign Exchange ◽  
World Economy ◽  
Domestic Economy ◽  
The World ◽  
Exchange Policy ◽  
Effective Integration

At present Russia faces the task of great importance - effective integration into the world economy. The success of this process largely depends on the strength of the domestic economy and stable economic growth. To attain such a goal certain changes in economic approaches are required which imply more active, focused and concerted steps in the monetary, fiscal and foreign exchange policy.

Sign in / Sign up

Export Citation Format

Share Document