Central banks’ liquidity management plays a crucial role in the implementation of monetary policy. In most countries central banks influence short term interest rates through determining the equilibrium conditions of supply and demand in... more
Central banks’ liquidity management plays a crucial role in the implementation of monetary policy. In most countries central banks influence short term interest rates through determining the equilibrium conditions of supply and demand in the market for bank reserves (liquidity). This article describes the liquidity management practice of the National Bank of Hungary in the period of 1998-2001. This period is characterized by two particular circumstances. First, there is a substantial liquidity surplus, therefore the Bank influences market interest rates using the liabilities side instruments of its balance sheet. Second, as a result of the narrow-band exchange rate regime and the fact that the Treasury Account is held with the Bank, the amount of liquidity is highly volatile and hard to forecast. The article explains how the Bank forecasts liquidity and the movements of overnight interest rate in these circumstances, and it describes the development of monetary policy instruments ap...
Central Banks have been at the heart of the recent Global Financial Crisis and in the face of unprecedented challenges: to ensure monetary stability in a period of deep financial turmoil. Which seems to require rethinking the theoretical... more
Central Banks have been at the heart of the recent Global Financial Crisis and in the face of unprecedented challenges: to ensure monetary stability in a period of deep financial turmoil. Which seems to require rethinking the theoretical precepts and practice of international monetary this study is to survey the evolution of the central bank in terms of functions performed throughout its history in the context of the dominant paradigm of each stage of evolution of society. The empirical research work carried out year impact of monetary policy on the evolution of inflation targeting price stability over the last fifty years. The Great Inflation to the current global crisis. Paradigm dedicated to monetary policy focused on price stability as an independent and objective, seems to resist the crisis. Although there is agreement on maintaining price stability as a priority objective of the central bank, most researchers and practitioners believe that financial stability is as important f...
This paper studies the proposition that an inflation bias can arise in a setup where a central banker with asymmetric preferences targets the natural unemployment rate. Preferences are asymmetric in the sense that positive unemployment... more
This paper studies the proposition that an inflation bias can arise in a setup where a central banker with asymmetric preferences targets the natural unemployment rate. Preferences are asymmetric in the sense that positive unemployment deviations from the natural rate are weighted more (or less) severely than negative deviations in the central banker's loss function. The bias is proportional to
In this study, the estimation power of Extended Kalman Filter is tested within a simple Keynesian macroeconomic model. After the model is written in a non-linear state space form, Extended Kalman Filter emerges as the appropriate... more
In this study, the estimation power of Extended Kalman Filter is tested within a simple Keynesian macroeconomic model. After the model is written in a non-linear state space form, Extended Kalman Filter emerges as the appropriate methodology to estimate both state variables and the parameters. The simulation results suggest that such a methodology can also be employed in explaining more complex macroeconomic dynamics.
Due to their ties with elected leaders, central bankers may pursue policies that are not in society's best interests. Consequently, the relationship between the public and the central bank can be... more
Due to their ties with elected leaders, central bankers may pursue policies that are not in society's best interests. Consequently, the relationship between the public and the central bank can be characterized as a principal-agent problem. An inflation and stabilization bias arise as a result of this agency problem and the magnitudes of these biases depend on the political environment.
Abstract: This paper is one chapter of the volume “Regulation and Economics” of the second edition of the Encyclopedia of Law and Economics. The authors review the economics of banking and financial markets and the regulatory response to... more
Abstract: This paper is one chapter of the volume “Regulation and Economics” of the second edition of the Encyclopedia of Law and Economics. The authors review the economics of banking and financial markets and the regulatory response to market failure. Market failure in finance depends on problems of information and externalities. Regulation addresses these problems through conduct of business rules
Centre for Management and Economic Research (CMER) Lahore University of Management Sciences (LUMS) Opposite Sector 'U', DHA, Cantt, Lahore, 54792 Pakistan URL:http//ravi.lums .edu.pk/cmer ... Abid. A. Burki Director CMER... more
Centre for Management and Economic Research (CMER) Lahore University of Management Sciences (LUMS) Opposite Sector 'U', DHA, Cantt, Lahore, 54792 Pakistan URL:http//ravi.lums .edu.pk/cmer ... Abid. A. Burki Director CMER Associate Professor, Economics School of ...
An artificial neural network (hence after, ANN) is an information processing paradigm that is inspired by the way biological nervous systems, such as the brain, process information. In previous two decades, ANN applications in economics... more
An artificial neural network (hence after, ANN) is an information processing paradigm that is inspired by the way biological nervous systems, such as the brain, process information. In previous two decades, ANN applications in economics and finance; for such tasks as pattern reorganization, and time series forecasting, have dramatically increased. Many central banks use forecasting models based on ANN methodology for predicting various macroeconomic indicators, like inflation, GDP Growth and currency in circulation etc. In this paper, we have attempted to forecast monthly YoY inflation for Pakistan by using ANN for FY08 on the basis of monthly data of July 1993 to June 2007. We also compare the forecast performance of the ANN model with conventional univariate time series forecasting models such as AR(1) and ARIMA based models and observed that RMSE of ANN based forecasts is much less than the RMSE of forecasts based on AR(1) and ARIMA models. At least by this criterion forecast bas...
This study presents the significance of the currency crises, discusses the related literature and applies a model of economic vulnerability to Turkey during 1985Q2-2004Q2. The common approach in currency crisis literature is to focus on... more
This study presents the significance of the currency crises, discusses the related literature and applies a model of economic vulnerability to Turkey during 1985Q2-2004Q2. The common approach in currency crisis literature is to focus on the performance of ...
We analyze the impact of electronic money competition on policy outcomes. We consider di® erent assumptions regarding the objectives of the central bank and its ability to commit to future policies. Electronic money competition can... more
We analyze the impact of electronic money competition on policy outcomes. We consider di® erent assumptions regarding the objectives of the central bank and its ability to commit to future policies. Electronic money competition can discipline a revenue maximizing ...
The Decree 46 of 1992 created the National Board for Community Banks which was granted the power to license community banks. Community banks were created to: (1) promote rural development through provision of banking and financial... more
The Decree 46 of 1992 created the National Board for Community Banks which was granted the power to license community banks. Community banks were created to: (1) promote rural development through provision of banking and financial services, (2) enhance rural productive activities, and (3) improve economic status of small-scale producers in rural and urban areas. According to Marx (2004), Nigeria
Different types of conflict have different effects on the financial system. Country priorities for reconstruction therefore vary accordingly. Nevertheless, the following problems repeatedly occur in reconstruction. First, central banks... more
Different types of conflict have different effects on the financial system. Country priorities for reconstruction therefore vary accordingly. Nevertheless, the following problems repeatedly occur in reconstruction. First, central banks often remain weak and under-resourced. The ...
Forecasting stock price or stock index is an important financial subject that has attracted researchers' attention for many years. In this paper, we put forward a new method called HLP as data preprocessing to process the stock data. By... more
Forecasting stock price or stock index is an important financial subject that has attracted researchers' attention for many years. In this paper, we put forward a new method called HLP as data preprocessing to process the stock data. By HLP method we can get the stock high low point with different frequency and amplitude. The extracted data describes the feature of stock price movement. After that we construct ANN models to forecast the stock movement direction and price. The HLP method and ANN models give assistance to investors.
Russian monetary policy has failed persistently to achieve sustained low inflation, both in absolute terms and relative to the peer group of countries similarly exiting from Soviet-style central planning. This paper explores the reasons... more
Russian monetary policy has failed persistently to achieve sustained low inflation, both in absolute terms and relative to the peer group of countries similarly exiting from Soviet-style central planning. This paper explores the reasons for this state of affairs by analysing the kind of monetary policy that has been pursued by the central bank during the period 1995 to 2009. Our contribution is to search for a possible transmission channel between the real interest rate, inflation rate, exchange rate, output growth and foreign reserve growth, after having controlled for the effect of oil price inflation. Using a vector autoregressive model in error-correction form and using sign restrictions methodology, we show that the monetary authorities' failure to abate double-digit inflation appears to be driven by the policy of exchange rate targeting, as reflected in our identified exchange rate shocks.
Since the outbreak of turbulence in the financial markets in August 2007, the implementation of monetary policy – typically a peripheral aspect for observers of monetary policy – has attracted increased attention. The heightened attention... more
Since the outbreak of turbulence in the financial markets in August 2007, the implementation of monetary policy – typically a peripheral aspect for observers of monetary policy – has attracted increased attention. The heightened attention was accompanied by uncertainty about how to interpret the liquidity measures taken and what to make of the new instruments introduced. This contribution provides the
The intertemporal approach views the current-account balance as the outcome of forward-looking dynamic saving and investment decisions. This paper, a chapter in the forthcoming third volume of the Handbook of International Economics,... more
The intertemporal approach views the current-account balance as the outcome of forward-looking dynamic saving and investment decisions. This paper, a chapter in the forthcoming third volume of the Handbook of International Economics, surveys the theory and empirical work on the intertemporal approach as it has developed since the early 1980s. After reviewing the basic one-good, representative- consumer model, the paper
تعتبر الازمة المالية العالمية أحد أهم المحفزات التي أدت الى تطوير وتحديث القوانين والتشريعات والأساليب المالية والمصرفية, فعلى الرغم من تأثيراتها السلبية على نمو الإقتصاد وإرتفاع مستوى البطالة ولكنها أعطت إنطباعاً للإقتصادات الكبرى بهشاشة... more
تعتبر الازمة المالية العالمية أحد أهم المحفزات التي أدت الى تطوير وتحديث القوانين والتشريعات والأساليب المالية والمصرفية, فعلى الرغم من تأثيراتها السلبية على نمو الإقتصاد وإرتفاع مستوى البطالة ولكنها أعطت إنطباعاً للإقتصادات الكبرى بهشاشة أنظمتهم المالية ووجوب تحديثها من أجل الحفاظ على الإستقرار المالي في حالة حدوث أزمات مالية مستقبلية. تهدف هذه الورقة الى إستعراض آثار الأزمة المالية العالمية على السياسة النقدية التقليدية وكيفية التحول الى السياسة النقدية غير التقليدية ومدى تأثير ذلك على النمو الإقتصادي والتضخم وأسعار الفائدة وإمكانية تصديها لأزمات مالية محتملة, كما إستعرضت الورقة أهم التحديات التي تواجه البنك المركزي بوصفه أحد أهم الأطراف في الإستقرار المالي. خلص الباحثان الى أنه لابد للبنوك المركزية والتي إستخدمت السياسة النقدية غير التقليدية خلال الازمة المالية من التحول وبشكل تدريجي الى السياسة النقدية التقليدية لأنها أكثر أماناً وأقل تكلفة, كما أنه لابد من تنسيق الجهود الدولية لتنظيم اللوائح والقوانين والحد من الأثار السلبية للعولمة, بالإضافة الى ذلك فقلد خلص الباحثان الى أن الإبتكار المالي والتقني يؤثر على كل من السياسات الوقائية وسياسات حماية المستهلك حيث يجب توفير التوازن مابين الإبتكار التقني والكفاءة المالية وكذلك توعية المستهلكين بكيفية إستخدام هذه التقنيات وماهي المخاطر المصاحبة لها.
This paper sets out a version of the Taylor-Romer model of short-run macroeconomic equilibrium which can be used for teaching undergraduate economics principles courses.The aim is to generate a model with the proven advantages of the... more
This paper sets out a version of the Taylor-Romer model of short-run
macroeconomic equilibrium which can be used for teaching undergraduate
economics principles courses.The aim is to generate a model with the proven
advantages of the IS-LM framework but with a more realistic description of central bank behaviour.The paper then provides a dynamic analysis of longer-term adjustment using a phase diagram but without the need for a formal mathematical derivation.