Improving the use of discretion in monetary policy

Mishkin, Frederic S.

doi:10.1111/infi.12337

Cited by 9 publications

(5 citation statements)

References 45 publications

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“…To safeguard themselves from unforeseen cash outflows, banks already hold a part of their deposits, as the RR from the regulator that should serve as a precautionary measure against liquidity or other related risks (Mishkin, 2018). That said, the regulator's choice of RR may not coincide with the bank's desired R P .…”

Section: Sources Of Excess Liquiditymentioning

confidence: 99%

Paradox of Excess Liquidity in European Emerging and Transition Economies

Kastrati¹

2022

Prague Economic Papers

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European emerging and transition economies are in immense need of investments and renewal of capital, yet they produce a considerable amount of unutilized resources. In particular, banks hold excess liquidity in the face of seemingly profitable lending opportunities. Is it a demand-side or supply-side problem or is this region entirely different and have we been working under the wrong paradigm? This study creates a new estimate of excess liquidity by taking into account banks' overall liquidity position. Breaking down precautionary from involuntary excess liquidity, a significant presence of the latter is evident. A part of the story deals with insensitivity of deposits to interest rates. Based on our standard understanding of how banks work, this is puzzling and this study creates a new way to look at this. Using new measures is the way to launch the investigation of causes and policy implications for involuntary excess liquidity.

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Section: Sources Of Excess Liquiditymentioning

confidence: 99%

Paradox of Excess Liquidity in European Emerging and Transition Economies

Kastrati¹

2022

Prague Economic Papers

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“…The debate on whether the monetary policy should be guided by some rules or be left under the discretion of the policy maker has the origin since the early days of the central 2007 (Taylor, 2011;Mishkin, 2018). The advocates of rules argue the monetary policy needs a law or rule to have precise prescription for setting policy instruments to deal with the economic circumstances.…”

Section: Introductionmentioning

confidence: 99%

Do the Monetary Policy Makers Follow Rules? Testing Taylor’s Rule for Nepal

Katuwal¹

2019

Economic Journal of Nepal

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The study estimates Taylor’s rule for Nepal by using the annual time series data for the period of 1988-2018. As a requirement of Taylor's rule, the output gap has been estimated by using Hodric-Perscott filter. Consumer price index has been used as measure of inflation and 91-days treasury bills rate is taken as the proxy for the short-term interest rate set by central bank of Nepal. The ordinary least square method has been used to estimate the Taylor's equation The results show that. As Augmented Dickey-Fuller test shows that all the variables used in this study are in level form. The results show that there is a positive relationship of T-bills rule with inflation output gap. Interest rate smoothing is found to be a major concern of central bank of Nepal but follows the Taylor’s rule partially.

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“…According to Mian and Sufi (2014), household debt was the main cause of the Great Recession in the US. Problems in one small part of the financial system-the subprime mortgage sector-contributed to the beginning of the worst financial crisis since the Great Depression (Mishkin 2017).…”

Section: Introductionmentioning

confidence: 99%

Household Debt in OECD Countries: The Role of Supply-Side and Demand-Side Factors

2018

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In many countries, household debt increased from the 1990s until the global financial crisis of 2007-2008 and then stagnated with the Great Recession, the euro-area sovereign debt crisis and deleveraging. In spite of these common trends, differences in national household debt/disposable income ratios are evident. This paper studies the determinants of household debt using a dataset of 33 countries and taking into account both demand-side and supply-side factors. The econometric exercises, covering the period 1995-2016, yield the following results. First, there is a positive link between household debt and both household wealth and house price growth. Second, the quality of bankruptcy laws relates positively to household debt, whereas longer insolvency resolution times are associated with lower household debt. Third, Anglo-Saxon legal origin and Scandinavian legal origin have a stronger link with household debt than French and German legal origin. Fourth, household debt is higher in countries with social-democratic and liberal welfare models than in conservative and Eastern European welfare states. Fifth, the ratio of public debt to GDP displays a negative association with private debt. Last, the effect of saving on household debt is significant only in the years of household deleveraging, i.e. after the global financial crisis. While the effect of demand-side variables is unstable over time, supply-side variables appear to be more persistent in determining the level of household debt.

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Improving the use of discretion in monetary policy

Cited by 9 publications

References 45 publications

Paradox of Excess Liquidity in European Emerging and Transition Economies

Paradox of Excess Liquidity in European Emerging and Transition Economies

Do the Monetary Policy Makers Follow Rules? Testing Taylor’s Rule for Nepal

Household Debt in OECD Countries: The Role of Supply-Side and Demand-Side Factors

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