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Author: Mr.Adolfo Barajas Publisher: International Monetary Fund ISBN: 1513531107 Category : Business & Economics Languages : en Pages : 41
Book Description
Despite welfare and poverty-reducing benefits for recipient households, remittance inflows have been shown to entail macroeconomic challenges; producing Dutch Disease-type effects through their upward (appreciation) pressure on real exchange rates, reducing the quality of institutions, delaying fiscal adjustment, and ultimately having an indeterminate effect on long-run growth. The paper explores an additional challenge, for monetary policy. Although they expand bank balance sheets, providing a stable flow of interest-insensitive funding, remittances tend to increase banks’ holdings of liquid assets. This both reduces the need for an interbank market and severs the link between the policy rate and banks’ marginal costs of funds, thus shutting down a major transmission channel. We develop a stylized model based on asymmetric information and a lack of transparent borrowers and undertake econometric analysis providing evidence that increased remittance inflows are associated with a weaker transmission. As independent monetary policy becomes impaired, this result is consistent with earlier findings that recipient countries tend to favor fixed exchange rate regimes.
Author: Mr.Adolfo Barajas Publisher: International Monetary Fund ISBN: 1513531107 Category : Business & Economics Languages : en Pages : 41
Book Description
Despite welfare and poverty-reducing benefits for recipient households, remittance inflows have been shown to entail macroeconomic challenges; producing Dutch Disease-type effects through their upward (appreciation) pressure on real exchange rates, reducing the quality of institutions, delaying fiscal adjustment, and ultimately having an indeterminate effect on long-run growth. The paper explores an additional challenge, for monetary policy. Although they expand bank balance sheets, providing a stable flow of interest-insensitive funding, remittances tend to increase banks’ holdings of liquid assets. This both reduces the need for an interbank market and severs the link between the policy rate and banks’ marginal costs of funds, thus shutting down a major transmission channel. We develop a stylized model based on asymmetric information and a lack of transparent borrowers and undertake econometric analysis providing evidence that increased remittance inflows are associated with a weaker transmission. As independent monetary policy becomes impaired, this result is consistent with earlier findings that recipient countries tend to favor fixed exchange rate regimes.
Author: Mr.Luis Brandao-Marques Publisher: International Monetary Fund ISBN: 1513529730 Category : Business & Economics Languages : en Pages : 54
Book Description
Central banks in emerging and developing economies (EMDEs) have been modernizing their monetary policy frameworks, often moving toward inflation targeting (IT). However, questions regarding the strength of monetary policy transmission from interest rates to inflation and output have often stalled progress. We conduct a novel empirical analysis using Jordà’s (2005) approach for 40 EMDEs to shed a light on monetary transmission in these countries. We find that interest rate hikes reduce output growth and inflation, once we explicitly account for the behavior of the exchange rate. Having a modern monetary policy framework—adopting IT and independent and transparent central banks—matters more for monetary transmission than financial development.
Author: Kodjovi M. Eklou Publisher: International Monetary Fund ISBN: Category : Business & Economics Languages : en Pages : 29
Book Description
Monetary policy transmission in EMs has been found to be weak historically due to under-developed financial markets and heavy central bank intervention in FX markets that undermine the exchange rate channel. Against this background, this paper investigates the transmission of monetary policy, including the role of external factors, in Malaysia and highlight findings that could be relevant for other EMs. We find an important role for the credit and the exchange rate channels. Further, we also find a complementary role for policy tools including Foreign Exchange Intervention (FXI) and liquidity tools such as Statutory Reserve Requirement in shaping the transmission of monetary policy. We then explore the spillover effects of external global factors including global monetary policy and global commodity prices on monetary policy transmission in a small open economy such as Malaysia. The results show that while global commodity prices do not impair monetary policy transmission, global monetary policy tightening could complement domestic efforts to achieve price stability by inducing a global disinflation. Finally, monetary policy transmission is delayed and weakened in high inflationary environment, with the implication that more aggressive and preemptive policy actions may be needed in such cases.
Author: Publisher: World Bank Publications ISBN: 082136345X Category : Languages : en Pages : 182
Book Description
International migration, the movement of people across international boundaries to improve economic opportunity, has enormous implications for growth and welfare in both origin and destination countries. An important benefit to developing countries is the receipt of remittances or transfers from income earned by overseas emigrants. Official data show that development countries' remittance receipts totaled 160 billion in 2004, more than twice the size of official aid. This year's edition of Global Economic Prospects focuses on remittances and migration. The bulk of the book covers remittances.
Author: Juan Antonio Morales Publisher: Oxford University Press ISBN: 0192597027 Category : Business & Economics Languages : en Pages : 360
Book Description
Monetary Policy in Low Financial Development Countries provides a broad coverage of the monetary policy issues faced by developing countries with low financial depth. These low and lower middle income countries are characterized by the predominance of bank finance, shallow financial markets, low financial inclusion, weak integration with world capital markets, and a high degree of informality in economic activity. Monetary policy acquires special twists, making it different in many aspects from the policies followed in advanced and emerging market economies. This book covers the main facets of monetary policy making, using an approach that combines discussions of theoretical arguments, of results from empirical studies and of relevant policy experiences. It presents the monetary policy instruments that central banks rely on in these countries. It assesses the specificities of their monetary transmission mechanism, i.e. the way central banks' actions affect output and prices. It evaluates the advantages, drawbacks, and challenges of the different nominal anchors they may choose from: exchange rate targeting, monetary targeting, and inflation targeting. This discussion is set against the background of the three main goals pursued by central banks: price, output, and financial stability. Particular attention is devoted to the issue of the credibility of central banks and to the trade-offs they face when external shocks, to which these countries are very vulnerable, lead to conflicts among the three goals they pursue. The authors also cover more specific topics, such as the coordination between monetary and fiscal policy, the challenges raised by dollarization, the implications of informal labour markets and of microfinance institutions for monetary policy-making, as well as the role of models for forecasting and policy evaluation by central banks.
Author: International Monetary Fund Publisher: International Monetary Fund ISBN: 1498343694 Category : Business & Economics Languages : en Pages : 61
Book Description
With single-digit inflation and substantial financial deepening, developing countries are adopting more flexible and forward-looking monetary policy frameworks and ascribing a greater role to policy interest rates and inflation objectives. While some countries have adopted formal inflation targeting regimes, others have developed frameworks with greater target flexibility to accommodate changing money demand, use of policy rates to signal the monetary policy stance, and implicit inflation targets.
Author: International Monetary Fund. Asia and Pacific Dept Publisher: International Monetary Fund ISBN: 1513568043 Category : Business & Economics Languages : en Pages : 98
Book Description
Tonga’s recovery following the devastation of the 2018 Cyclone Gita has been derailed by a double blow from the pandemic and Cyclone Harold. FY2020 GDP growth is estimated to fall to -21⁄2 percent due to domestic containment measures, a sudden stop in tourism, and investment delays. The full brunt of the pandemic will be felt in FY2021 (beginning July) during peak tourism season, when a deeper contraction is expected. A worse outcome was avoided by early actions to close external borders—which has kept Tonga COVID-19-free—and prompt economic support. Beyond FY2021, the recovery is expected to resume in line with the global recovery, but the magnitude and trajectory is uncertain.
Author: Hector Perez-Saiz Publisher: International Monetary Fund ISBN: 1498324487 Category : Business & Economics Languages : en Pages : 37
Book Description
We propose a simple macroeconomic model with input-output sectoral linkages based on Acemoglu et al. (2016) to quantify how changes in aggregate demand due to additional income from household’s remittances propagates through the network of input-output linkages in Sub-Saharan African countries. We first propose two network centrality measures to assess the role of some sectors as key input providers in the economy. Then, we use these measures to quantify the effect of sectoral linkages on sectoral and total output following an increase in remittances inflows. Our empirical results suggest that the effects of remittances on recipient economies increase with the degree of linkages across sectors, which is especially prominent in the case of the financial intermediation sector. Our paper contributes to the emerging macroeconomic literature on the propagation of shocks across sectors and the implications for the whole economy.
Author: Mr.Adolfo Barajas
Author: Mr.Adolfo Barajas
Author: 
Author: Mr.Luis Brandao-Marques
Author: Kodjovi M. Eklou
Author: 
Author: Juan Antonio Morales
Author: International Monetary Fund
Author: International Monetary Fund. Asia and Pacific Dept
Author: International Monetary
Author: Hector Perez-Saiz