The effectiveness of monetary policy and output fluctuations: An asymmetric analysis

Irandoust, Manuchehr

doi:10.1111/1467-8454.12177

Cited by 6 publications

(3 citation statements)

References 49 publications

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“…These results, obtained from a short‐run perspective, complement those in Irandoust (2020) regarding the monetary policy, and those in Gechert et al (2019) when calling for a fine‐tuning fiscal policy. Generic policy receipts to re‐balance public accounts may have strong asymmetric effects across countries (when applied in the same year), but also within countries (depending on the year in which the policy is applied).…”

Section: Introductionsupporting

confidence: 81%

“…However, other studies have shown the complex dynamics given rise by cyclical fluctuations in inflation and unemployment and have outlined the difficulties in forecasting the effects of shocks and policy changes (Kolsrud & Nymoen, 2014). Given that asymmetric effects of the monetary policy on output have also been highlighted for a group of Organisation for Economic Co-operation and Development (OECD) countries (Irandoust, 2020), it is opportune to ask to what extent the unemployment-output trade-off is a time-varying coefficient. Does it also vary across the business cycle phase?…”

Section: Introductionmentioning

confidence: 99%

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Fiscal deficits and the socioeconomic consequences of rebalancing: Insights from a TVP‐VAR with stochastic volatility

Pham

Sala

2022

Australian Economic Papers

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This article connects two salient economic features: (i) Fiscal shocks have asymmetric effects across business cycle phases (Gechert, Horn, & Paetz, 2019); (ii) the unemployment‐output trade‐off is time varying and may be unstable. The intertwined dynamic behaviour of fiscal deficit shocks and the unemployment‐output trade‐off is studied in this article using a time‐varying parameter (TVP) vector autoregression (VAR) with stochastic volatility techniques applied to the analysis of data from Canada, France, Germany, Japan, Spain, Sweden, United Kingdom and the United States of America. We confirm the trade‐off heterogeneity across country, and its time‐varying nature across time, showing in addition its fluctuation around a long‐run reference value. We document significant short‐run impacts of fiscal shocks on the unemployment‐output trade‐off which, based on the experience of the Global Financial Crisis, becomes larger in periods of economic turmoil. Policy‐wise, the rebalancing of public finances may have unexpected adverse effects on job creation if implemented during slumps, precisely when the labour market sensitivity with respect to the performance of the product market is likely to be more acute. This message is particularly relevant in the aftermath of the Covid‐19 pandemic.

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Section: Introductionsupporting

confidence: 81%

Section: Introductionmentioning

confidence: 99%

Fiscal deficits and the socioeconomic consequences of rebalancing: Insights from a TVP‐VAR with stochastic volatility

Pham

Sala

2022

Australian Economic Papers

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“…The econometric exercise of this study illustrates that there is a long‐run relationship between the growth of industrial output and monetary policy transmission channels. In a recent research, Irandoust (2020) obtained the asymmetric response of output to the changes in the real interest rate in OECD countries. The tightening of the monetary policy has affected the economy of the United Kingdom (Cesa‐Bianchi, Thwaites, & Vicondoa, 2020) and the United States by decreasing employment and real personal income (Pizzuto, 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

Modelling the monetary policy transmission on the manufacturing output: Evidence from the fastest growing Indian economy

Sankaran

Arjun

Vadivel³

2020

Journal of Public Affairs

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The existing literature portrays that the instruments of monetary policy, such as interest rate, money supply, and price have a direct bearing on economic growth and social welfare. Against this background, the present study investigates the monetary policy transmission on manufacturing output in one of the fastest‐growing economies—India. Highlighting how the Central Bank works in a political–economic context, the precise research question used entails—how does monetary policy affect the manufacturing output in India? And what is the transmission channel and level of magnitude? To address these questions, we employed autoregressive distributed lag bounds testing for co‐integration on the time series data collected from World Development Indicators and International Finance Statistics for the period from 1980 to 2018. The model estimation affirms the presence of a co‐integrating relationship among the variables. In the short run, we have a mixed result of relationship among determining variables and manufacturing output, while in the long run, the lending rate has positive and the exchange rate has significant relationships among the variables. The variables such as consumption and gross capital formation have insignificant influence even though negative. The causality test reveals unidirectional short‐run causality stemming from lending rate to industrial output testifying lending rate‐driven growth. In a nutshell, the lending rate has long‐term positive relationship with that of industrial output, and the functional independence of the Central Bank has long‐term consequences on output and this requires a right chord of balance to be struck between political motives and the RBI's autonomy.

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Research on the Risk of the Online Lending Market in China: A New Perspective Based on MF-DCCA

Feng

Liu

Yang

2021

Emerging Markets Finance and Trade

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The effectiveness of monetary policy and output fluctuations: An asymmetric analysis

Cited by 6 publications

References 49 publications

Fiscal deficits and the socioeconomic consequences of rebalancing: Insights from a TVP‐VAR with stochastic volatility

Fiscal deficits and the socioeconomic consequences of rebalancing: Insights from a TVP‐VAR with stochastic volatility

Modelling the monetary policy transmission on the manufacturing output: Evidence from the fastest growing Indian economy

Research on the Risk of the Online Lending Market in China: A New Perspective Based on MF-DCCA

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