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Author: Mr.Harun Alp Publisher: International Monetary Fund ISBN: 1463933207 Category : Business & Economics Languages : en Pages : 22
Book Description
Malaysia was hit hard by the global financial crisis of 2008-09. Anticipating the downturn that would follow the episode of extreme financial turbulence, Bank Negara Malaysia (BNM) let the exchange rate depreciate as capital flowed out, and preemptively cut the policy rate by 150 basis points. Against this backdrop, this paper tries to quantify how much deeper the recession would have been without the BNM's monetary policy response. Taking the most intense year of the crisis as our baseline (2008:Q4-2009:Q3), counterfactual simulations indicate that rather the actual outcome of a -2.9 percent contraction, growth would have been -3.4 percent if the BNM had not implemented countercyclical and discretionary interest rate cuts. Furthermore, had a fixed exchange rate regime been in place, simulations indicate that output would have contracted by -5.5 percent over the same four-quarter period. In other words, exchange rate flexibility and the interest rate cuts implemented by the BNM helped substantially soften the impact of the global financial crisis on the Malaysian economy. These counterfactual experiments are based on a structural model estimated using Malaysian data.
Author: Mr.Harun Alp Publisher: International Monetary Fund ISBN: 1463933207 Category : Business & Economics Languages : en Pages : 22
Book Description
Malaysia was hit hard by the global financial crisis of 2008-09. Anticipating the downturn that would follow the episode of extreme financial turbulence, Bank Negara Malaysia (BNM) let the exchange rate depreciate as capital flowed out, and preemptively cut the policy rate by 150 basis points. Against this backdrop, this paper tries to quantify how much deeper the recession would have been without the BNM's monetary policy response. Taking the most intense year of the crisis as our baseline (2008:Q4-2009:Q3), counterfactual simulations indicate that rather the actual outcome of a -2.9 percent contraction, growth would have been -3.4 percent if the BNM had not implemented countercyclical and discretionary interest rate cuts. Furthermore, had a fixed exchange rate regime been in place, simulations indicate that output would have contracted by -5.5 percent over the same four-quarter period. In other words, exchange rate flexibility and the interest rate cuts implemented by the BNM helped substantially soften the impact of the global financial crisis on the Malaysian economy. These counterfactual experiments are based on a structural model estimated using Malaysian data.
Author: International Monetary Fund. Monetary and Capital Markets Department Publisher: International Monetary Fund ISBN: 1484352246 Category : Business & Economics Languages : en Pages : 20
Book Description
This technical note on Monetary Liquidity Frameworks on Malaysia’s inflation analyzes that it has returned to a more stable path, after some wider fluctuations before and during the global financial crisis. On the liability side, Malaysian banks’ liquidity is based largely on deposits. The increase in foreign reserves at the Central Bank is a major driver of the growth of the Bank Negara Malaysia’s balance sheet. Monetary operations with Islamic banks are carried out through specific Shariah-compliant instruments.
Author: Prema-chandra Athukoralge Publisher: Edward Elgar Publishing ISBN: 9781781009666 Category : Business & Economics Languages : en Pages : 184
Book Description
'Professor Athukorala tells a fascinating story of one of the most successful economies in the world economy in the last decades, from the inception of its liberalisation policy to its radical decision to pursue an independent recovery path after the 1997 Asian financial crisis. This is case-study economics at its best. The book is superbly organised, meticulously researched and clearly written; a treat for professional economists and policymakers alike.' - Tony Thirlwall, University of Kent, UK 'Malaysia is one of the great success stories of the last quarter of the twentieth century. From 1988 it had one of the highest growth rates in the world, and it managed to maintain ethnic peace in an undoubtedly difficult environment. Recently it has provided a major laboratory experiment of the use of capital controls at a time of crisis when a country is highly integrated in the world capital market. This excellent book presents the first careful analysis of the nature and effects of these controls, as well as providing a thorough background of how the Asian crisis played out in Malaysia.' - W.Max Corden, The Johns Hopkins University, US In the light of the Malaysian experience during the Asian financial crisis, this book examines the role of international capital mobility in making countries susceptible to financial crises and the use of capital controls as a crisis management tool. Malaysia provides an interesting case study of this subject given its significant capital market liberalisation prior to the onset of the crisis, and its fundamental shift in crisis management policy in September 1998. The prime focus of the book is on Malaysia's radical policy decision to pursue an independent recovery path, cut off from world markets by a system of capital control, as a viable alternative to the conventional market centred approach. The analysis suggests that, against the initial dire predictions of many economists, the capital controls have actually played a crucial supportive role in crisis management. Whether the controls have played a special role in delivering a superior recovery outcome in Malaysia compared to IMF-program countries remains a point of contention. However, there is strong evidence to suggest that this pragmatic policy choice was instrumental in achieving recovery, while minimising potential economic disruption and related social costs.
Author: Mr.Harun Alp Publisher: International Monetary Fund ISBN: 1463971176 Category : Business & Economics Languages : en Pages : 22
Book Description
Malaysia was hit hard by the global financial crisis of 2008-09. Anticipating the downturn that would follow the episode of extreme financial turbulence, Bank Negara Malaysia (BNM) let the exchange rate depreciate as capital flowed out, and preemptively cut the policy rate by 150 basis points. Against this backdrop, this paper tries to quantify how much deeper the recession would have been without the BNM's monetary policy response. Taking the most intense year of the crisis as our baseline (2008:Q4-2009:Q3), counterfactual simulations indicate that rather the actual outcome of a -2.9 percent contraction, growth would have been -3.4 percent if the BNM had not implemented countercyclical and discretionary interest rate cuts. Furthermore, had a fixed exchange rate regime been in place, simulations indicate that output would have contracted by -5.5 percent over the same four-quarter period. In other words, exchange rate flexibility and the interest rate cuts implemented by the BNM helped substantially soften the impact of the global financial crisis on the Malaysian economy. These counterfactual experiments are based on a structural model estimated using Malaysian data.
Author: Irwan Shah Zainal Abidin Publisher: UUM Press ISBN: 9672363141 Category : Business & Economics Languages : en Pages : 219
Book Description
Malaysia was once on the cusp of becoming one of the ‘Asian Tigers’ as a result of the impressively high growth rates recorded in the early 1990s. From 1990 until 1997, the growth rate was above 9 percent per annum on average. This performance came to an end when the economy was struck by the 1997/98 Asian Financial Crisis, the worst economic crisis Malaysia has ever experienced since independence. Things eventually worsened with the onslaught of the 2008/09 Global Financial Crisis, which dragged the Malaysian economy yet into another round of a recession with the growth rate contracting at 1.5 percent in 2009. On hindsight, these two events, which have had a substantial impact on the state of the Malaysian economy, pointed to several urgent calls for economic reforms, such as the need to address structural weaknesses of the economy and to have a growth target which is both sustainable as well as inclusive. When Datuk Seri Najib Razak became the sixth Prime Minister of Malaysia from April 2009 until May 2018, it was clear that a new approach to economic development for Malaysia had to be crafted. Towards this end, he introduced the National Transformation Policy (NTP), so that the economy can be transformed into one that is of high-income and developed status by the year 2020. He also set a new vision for Malaysia, also known as the 2050 National Transformation, or TN50, which is meant to chart a new course for Malaysia to move into the second half of the 21st century. How successful is this transformational agenda? What are the other issues and challenges which need to be addressed? What important lessons can we learn from this transformational journey? This book is an attempt to address these specific questions by assessing Najib’s economic plans, policies, programmes and vision which evolved during the nine years of his term as the sixth Prime Minister of Malaysia.
Author: Samuel Bassey Okposin Publisher: ISBN: Category : Business cycles Languages : en Pages : 216
Book Description
This study identifies the various economic crises that has plagued Malaysia since 1957. Besides examining theorectical debates and causes of each of these crises, it also discusses the economic impact of each of these crises in relation to the economy and looks at the policy measure adopted for each crisis.
Author: Dick K. Nanto Publisher: DIANE Publishing ISBN: 1437919847 Category : Business & Economics Languages : en Pages : 127
Book Description
Contents: (1) Recent Developments and Analysis; (2) The Global Financial Crisis and U.S. Interests: Policy; Four Phases of the Global Financial Crisis; (3) New Challenges and Policy in Managing Financial Risk; (4) Origins, Contagion, and Risk; (5) Effects on Emerging Markets: Latin America; Russia and the Financial Crisis; (6) Effects on Europe and The European Response: The ¿European Framework for Action¿; The British Rescue Plan; Collapse of Iceland¿s Banking Sector; (7) Impact on Asia and the Asian Response: Asian Reserves and Their Impact; National Responses; (8) International Policy Issues: Bretton Woods II; G-20 Meetings; The International Monetary Fund; Changes in U.S. Reg¿s. and Regulatory Structure; (9) Legislation.
Author: Mala Raghavan Publisher: ISBN: Category : Languages : en Pages : 442
Book Description
Over the years, many economies around the world have evolved in line with globalization and liberalization processes and have witnessed widespread changes in their conduct of monetary policy and the choice of monetary policy regimes. These processes have opened up new avenues and increased opportunities for financial market developments with greater financial integration and strong capital flows. The changing economic and financial environments have made modelling monetary policy and the identification of monetary policy shocks very challenging, particularly in small emerging open economies. To date, not much research work has been carried out on these economies, and this thesis attempts to fill this gap by addressing the problems associated with modelling monetary policy and the complexities involved in estimating monetary policy shocks and impulse response functions.In this thesis, we investigate the monetary transmission mechanism of the Malaysian economy, which provides an interesting case study to examine the effects of monetary policy on the real sectors of the economy under different exchange rate regimes. Malaysia adopted a managed float exchange rate regime prior to the 1997 Asian financial crisis and subsequently a pegged (to US dollar) exchange rate regime following the crisis. The specific aims of this research are: (i) To establish the necessary identification conditions to uncover Malaysian monetary policy shocks; (ii) To examine whether or not the identified model can resolve economic puzzles commonly found in monetary policy empirical literature; (iii) To evaluate the effectiveness of monetary policies on price levels and economic activities during the pre- and post-1997 Asian financial crisis periods; and (iv) To assess the strength of various monetary transmission channels such as interest rates, monetary aggregates, credits, asset prices and exchange rates in propagating monetary policy shocks under different exchange rate regimes.To achieve the above aims, we employ three different modelling strategies: (i) the vector autoregressive (VAR); (ii) the structural vector autoregressive (SVAR); and (iii) the vector autoregressive moving average (VARMA) models. The traditional VAR approach is used as a first step to conduct some preliminary analysis, and to develop and analyze the effects of Malaysian monetary policy. Subsequently, the SVAR models are used to address issues concerning the contemporaneous relationships between Malaysian macroeconomic variables and policy instruments. We establish identification restrictions that are broadly consistent with economic theory and stylized facts that are evident in prior empirical research findings. One of the important characteristics of our identified SVAR model is the set of foreign block exogeneity restrictions which we impose to reflect the fact that small open economies do not influence large economies. Further, under the managed and pegged exchange rate systems, we uncover the importance of various monetary channels through which monetary policy shocks affect the Malaysian economy.The VARMA models are found to be superior to the VAR-type models for forecasting economic and financial variables. However, VARMA models are rarely used in empirical studies of monetary policy analysis. We are among the first to apply this methodology to investigate the responses of Malaysian variables to various monetary shocks and to assess whether they are consistent with prior theoretical expectations and stylized facts. The attractiveness of the VARMA model is that its impulse response functions reveal the expected monetary policy effects on the Malaysian economy, particularly in the postcrisis period under the pegged exchange rate system. On the other hand, the VAR and SVAR models fail to generate reliable impulse responses in some cases.The overall results suggest that the crisis, and a subsequent major shift in the exchange rate regime, have affected the Malaysian monetary transmission mechanism. Malaysian domestic variables are more sensitive and volatile to both domestic and foreign monetary shocks under the managed float exchange rate system than under the fixed exchange rate system. Hence, it is apparent that the stringent capital control measures undertaken by the government in the post-crisis period have insulated the Malaysian economy to some extent against foreign shocks and have provided the desired monetary autonomy. Considering some disparities in the effects of monetary policy on the Malaysian economy during the pre- and post-crisis periods, it is essential that policy makers understand how the economic transformation, the openness of the economy and the growing integration with external economies affects the nature of the monetary transmission mechanism. Inour investigations, we uncover how various transmission channels work and we believe the outcome of our study can help the Malaysian Central Bank to steer the economy in the right direction, so that monetary policy can still remain an effective policy measure in achieving sustainable economic growth and price stability. In addition, the methodologies used in this thesis and the empirical findings will also enhance future research on similar small emerging open economies in devising appropriate monetary policy strategies under different policy regimes.
Author: Ms.Ana Corbacho Publisher: International Monetary Fund ISBN: 1513558900 Category : Business & Economics Languages : en Pages : 311
Book Description
The first part of the book examines the evolution of monetary policy and prudential frameworks of the ASEAN5, with particular focus on changes since the Asian financial crisis and the more recent period of unconventional monetary policy in advanced economies. The second part of the book looks at policy responses to global financial spillovers. The third and last part of the book elaborates on the challenges ahead for monetary policy, financial stability frameworks, and the deepening of financial markets.
Author: Mr.Harun Alp
Author: Mr.Harun Alp
Author: International Monetary Fund. Monetary and Capital Markets Department
Author: Prema-chandra Athukoralge
Author: Mr.Harun Alp
Author: Irwan Shah Zainal Abidin
Author: Samuel Bassey Okposin
Author: Dick K. Nanto
Author: Mala Raghavan
Author: Ms.Ana Corbacho
Author: Mei Ling Sieh-Lee