Should monetary policy lean against the wind in a small-open economy? Revisiting the Tinbergen rule

Peña, Rogelio De la

doi:10.1016/j.latcb.2021.100026

Cited by 7 publications

(2 citation statements)

References 14 publications

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“…According to Tinbergen's Rule, attaining policy goals requires that the number of policy instruments be at least equal to the number of target variables [70]. Therefore, to achieve the goal of weakening the green innovation polarization effect of China's GFP, a combination of policy instruments needs to be constructed.…”

Section: The Synergistic Effect Of China's Gfp and Its Supplementary ...mentioning

confidence: 99%

The Polarization Effect and Mechanism of China’s Green Finance Policy on Green Technology Innovation

Zhang

Dong

2023

Sustainability

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The advancement of green technology innovation (GTI) is crucial for facilitating green development. China, the largest carbon-emitting economy, should prioritize the acceleration of GTI to augment global green economic growth and reduce carbon emissions. Green finance policy (GFP) is a common instrument for encouraging enterprises to develop GTI. This study, therefore, takes the pilot policy of China’s Green Finance Reform and Innovation Pilot Zone as a “quasi-natural experiment” and uses the difference-in-differences method to explore the impact and mechanism of GFP on Chinese enterprises’ GTI. Based on the empirical analysis using microdata from Chinese industrial enterprises from 2015 to 2021, the following conclusions can be drawn. First, GFP has a green innovation polarization effect. It facilitates the development of GTI in green enterprises while hindering the progress of GTI in polluting enterprises. Second, GFP enhances the GTI of green enterprises by promoting innovative behaviors and factor allocation optimization behaviors. However, GFP reduces the GTI of pollution enterprises by promoting non-innovative investments and reducing the efficiency of factor allocation optimization. Third, the combination of policies utilizing GFP, environmental subsidy, and R&D subsidy can effectively increase the GTI of polluting enterprises without compromising the GTI of green enterprises. This study offers empirical evidence and policy recommendations for establishing a green finance system in developing countries.

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Section: The Synergistic Effect Of China's Gfp and Its Supplementary ...mentioning

confidence: 99%

The Polarization Effect and Mechanism of China’s Green Finance Policy on Green Technology Innovation

Zhang

Dong

2023

Sustainability

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“…Implementing CFM policy through capital controls and macroprudential regulation has been advised, particularly for EMEs, to safeguard the financial system and ensure monetary policy effectiveness. Capital inflow surges, especially when composed of offshore borrowing and associated with appreciation in exchange rates, contribute to increases in the credit gap, justifying the use of CFM as well as, potentially, monetary policy (De la Peña, 2021; Fendoğlu, 2017; Nier et al, 2020). The link of CFM to boom‐bust financial cycles means that the most important goal remains to control credit growth (Ahnert et al, 2021; Akinci & Olmstead‐Rumsey, 2018; Forbes & Warnock, 2021).…”

Section: Introductionmentioning

confidence: 99%

Capital flow management and monetary policy to control credit growth

Zehri,

Madjd‐Sadjadi

2023

Economics & Politics

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This paper examines whether capital flow management and monetary policies effectively reduce credit growth in emerging market economies in the presence of both conventional and unconventional monetary policy actions undertaken by advanced economies. We apply a dynamic panel model with fixed effects to a sample of 21 emerging market economies from 2000 to 2020 using quarterly data and more continuous variables than in other studies rather than limiting the variability using proxies. We find that capital controls and macroprudential regulation, as tools of capital flow management policy, moderate credit growth. This effect is particularly shown in countries with tighter monetary conditions. Our main findings highlight the useful role of coordinating capital flow management and monetary policies. This role stands for both fixed and flexible exchange rate regimes. Lastly, we find capital flow management and monetary policies manage to control credit in normal periods, but their coordination is less effective during crises and high volatility periods. Robustness checks suggest that these findings are stable across alternative proxies used in the literature, thus providing additional support for the validity of our results.

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Does “Lean Against the Wind” monetary policy improve welfare in a commodity exporter?

Peiris,

Shirobokov,

Tsomocos

2024

Journal of International Money and Finance

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Should monetary policy lean against the wind in a small-open economy? Revisiting the Tinbergen rule

Cited by 7 publications

References 14 publications

The Polarization Effect and Mechanism of China’s Green Finance Policy on Green Technology Innovation

The Polarization Effect and Mechanism of China’s Green Finance Policy on Green Technology Innovation

Capital flow management and monetary policy to control credit growth

Does “Lean Against the Wind” monetary policy improve welfare in a commodity exporter?

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