Suchergebnisse

In the present day world of fairly well-developed banking
systems where money stock in an economy is jointly determined by the
policies of .the Central Bank, the scheduled banks and the non-bank
public, the determination of money stock is an important variable in the
formulation of an appropriate monetary policy. In Pakistan however very,
frequent and significant changes in money supply during the fiscal year
suggest strong arbitrariness in the formulation and implementation of
the monetary policy. There are various approaches to the process of
money stock determination, one approach is through money multipliers.
Changes in money multipliers reflect the portfolio decisions of the
commercial banks, non-bank public and the monetary authority. Extensive
developments in the theory and applied research in the formulation of
money multipliers by Friedman and Schwartz (1960); Brunner and Meltzer
(1964); Hosek (1970); Bomhoff (1977) and others have estimated money _
multipliers for the industrialised ecOnomies but with the exception of
Hosek they treat the determinants of the money multipliers as exogenous
and are taken as given. However the determinants of money multipliers
depend on various interest rates and measures of economic activity which
are not constant.

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This study discusses China's money supply management in its economic transition. Institutional analysis and empirical evidence suggest (i) the People's Bank of China is capable of conducting indirect monetary policy in the central banking system, (ii) integral financial reforms in the areas of legislation, management, regulation, supervision, governance, and structure are required to overcome difficulties of the monetary base control, (iii) the money multipliers are technically predictable. These results provide ways for the central bank to improve the effectiveness of monetary policy enforcement. (JEL E51, E58, G21, P21)

1 Introduction -- Alternative Approaches to Money Stock Control -- Money Multiplier Forecasting -- Goals and Organization -- Summary of Results and Conclusions -- 2 The Money Multiplier Framework -- Derivation of Pre-1980 Money Multipliers -- Derivation of Post-1980 Money Multipliers -- Inclusion of Non-Bank Travelers Checks in Monetary Aggregates -- The Reserve Components in the Monetary Base Multipliers vs. the Reserve Multipliers -- 3 Initial Forecasting Models for the Old Money Stock Multipliers -- Modeling the Money Multiplier Components -- Estimation -- Model Stability -- Relationship of ARIMA Multiplier Models to Econometric Literature -- Sample Period Errors -- Seasonal Adjustment -- Conclusions -- 4 Evolution and Robustness of the Forecasting Models During a Period of Financial Innovation and Deregulation: 1977–1983 -- Adjustments for the Introduction of Automatic Transfer Accounts (ATS) -- Adjustments of the Forecasting Models for the -- Redefinitions of the Monetary Aggregates -- Reconstruction of the Reserve Adjustment Magnitude -- Inclusion of Non-bank Travelers Checks in the Monetary Aggregates -- NOW Account Shifts -- Impact of All-Savers Certificates and Money Market Deposit Accounts (MMDAs) -- 5 Monetary Control: The Implementation Experience -- Monetary Policy in Retrospect -- Analysis of the Component Ratio Forecast Errors, 1977–1982 -- Analysis of the Component Ratio Forecast Errors, 1982–1985 -- Analysis of Multiplier Forecast Errors -- An Alternative Short-run Targeting Procedure -- Appendix 5A Estimating the Accuracy of an Aggregate Control Procedure for Short-run Targeting of Monetary Aggregates -- 6 The Precision of Monetary Control -- Endogeneity, Exogeneity, and Reentry Rates -- Analysis of Component Errors -- Error Forecasts for Multipliers -- Alternative Specification of the Multiplier -- Conclusions -- Appendix 6A Partial Derivatives of the Monetary Base Multiplier -- 7 Consistent Target Ranges for Several Monetary Aggregates -- Reestimation of Multiplier Component Forecasting Models -- Conclusions -- 8 Conclusions -- References -- Appendix: Computer Programs for Estimation and Forecasting of Multipliers and Component Ratios -- Name Index.

This paper analyzes the relationship between fiscal multipliers and fiscal positions of governments using an Interactive Panel Vector Auto Regression model and a large data-set of advanced and developing economies. The methodology permits tracing the endogenous relationship between fiscal multipliers and fiscal positions while maintaining enough degrees of freedom to draw sharp inferences. The paper reports three major results. First, the fiscal multipliers depend on fiscal positions: the multipliers tend to be larger when fiscal positions are strong (i.e. when government debt and deficits are low) than weak. For instance, the long-run multiplier can be as large as unity when the fiscal position is strong, while it can be negative when the fiscal position is weak. Second, these effects are separate and distinct from the impact of the business cycle on the fiscal multiplier. Third, the state-dependent effects of the fiscal position on multipliers is attributable to two factors: an interest rate channel through which higher borrowing costs, due to investors' increased perception of credit risks when stimulus is implemented from a weak initial fiscal position, crowd out private investment; and a Ricardian channel through which households reduce consumption in anticipation of future fiscal adjustments.

The aims of this analysis are to see the effect of monetary factors such as foreign reserve and money multipliers and fiscal factor such as government expenditure toward money supply in Indonesia. The methods used in this analysis is Vector Autoregressive (VAR) or Vector Error Correction Model (VECM). This analysis uses a secondary data (three-month data) from 1986 until 2003. The result of this analysis, using VECM estimation, is that money supply, foreign reserve, and money multiplier have a short term and long term relationship. According to short term relationship, money supply and money multiplier have a positive correlation, with ceteris paribus assumption. Whereas a long term relationship shows that only foreign reserve and money multiplier have had a positive correlation, with ceteris paribus assumption.

The introduction of new financial i'nstruments l and the
consequent asset substitutability since the advent of financial
deregulation in 1991 has been accompanied by volatility of the money
multiplier and the monetary aggregates. While money demand studies exist
[Khan (1980)], the modelIing of the supply side of money and, in
general, the impact of financial innovations on money multipliers and
monetary aggregates has been largely ignored.2 In a recent study,
Siddiqui and Waheed (I994a) found that during 1992-93 the narrow money
multiplier felI and increased sharply, causing instability in MI. It was
also observed that the broad money multiplier showed similar instability
during the same period.

This paper analyzes the redistributive channel of a money financed fiscal stimulus (MFFS). It shows that the way in which this regime is implemented is crucial to determine its redistributive effects and consequently its effectiveness. In normal times, the most effective regime is a MFFS with no additional intervention by the Central Bank to stabilize the real public debt using inflation, whereas a MFFS accompanied by real debt stabilization - through the adjustment of seigniorage - is the most effective one in a ZLB scenario. In a TANK model this regime is so effective to avoid the recessionary effects implied by the ZLB. This result does not hold in a RANK model, where the redistributive channel is absent. Remarkably, contrary to the common wisdom a MFFS is followed by a moderate increase of inflation, which is only temporarily higher than the target.