The Islamic macroeconomic model

Al-Jarhi, Mabid

doi:10.4324/9781003025191-2

Cited by 5 publications

(5 citation statements)

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“…Arrif (1996) suggests that commercial banks should lend a certain percentage of demand deposits as interest-free loans. Fahmy (2006) and Al-Jarhi (1981) argue that CBs can use “deposit certificates” for open market operations and thus can increase or decrease the supply of money.…”

Section: Foundations Of Interest-free Monetary Policy and Review Of Recent Literaturementioning

confidence: 99%

Interest-free monetary policy and its impact on inflation and unemployment rates

Selim

Hassan

2019

IJIF

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Purpose This paper aims to examine the effects of interest-free and interest-based monetary policy on inflation and unemployment rates for two groups of countries where in one group, interest-free monetary policy (IFMP) was pursued, while in the other group, interest-based monetary policy (IBMP) was followed. Design/methodology/approach This study involves a sample of 23 developed countries divided into two groups. The authors measure economic performance by misery index (MI), and MI is calculated as unemployment rate plus inflation rate. A group of countries, where MI is lower, performs better compared to the other group where MI is relatively higher. Findings The results reveal that in group of 12 countries where IFMP is adopted, the MI is lower and thus performs better compared to a group of countries where IBMP is pursued. Research limitations/implications The findings of this study have profound implications for the policymakers and government leaders who look for a solution to maintain both low inflation and unemployment rates. The findings in this study clearly portray that such ideal situations can only be achieved by pursuing IFMP. No wonder the countries which have been historically pursuing IFMP such as Japan, Switzerland, Sweden, the Netherlands and Denmark have been able to contain both inflation and unemployment rates compared to their counterparts among the English-speaking countries. Originality/value This is one of the most recent tests on the differences in economic performance between IFMP and IBMP. These results have significant value for policymakers and central bankers who have been struggling to maintain lower MI for decades.

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Section: Foundations Of Interest-free Monetary Policy and Review Of Recent Literaturementioning

confidence: 99%

Interest-free monetary policy and its impact on inflation and unemployment rates

Selim

Hassan

2019

IJIF

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“…Moreover, although mainstream economics says that forwarding social and economic justice decreases efficiency, Islam says that justice and efficiency are compatible (Al-Jarhi & Zarqa, 2005). Indeed, the one reinforces the other so that:-…”

Section: Acceptability To All Religionsmentioning

confidence: 99%

JOCRISE Paradigm, Methodology & Economics

Shakespeare,

Mouatt,

Challen

2023

JOCRISE

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JOCRISE is embarked upon a project of universal, even cosmic, significance. Rejecting the outdated, inaccurate and static understanding of reality which underlies mainstream economics, the Paradigm provides a new, accurate and dynamic understanding of our changing world. The new understanding is not reductionist and encompasses many subjects (including history, sociology, psychology, religion, environment, anthropology, technology and epistemology). The result is an ability to find solutions for major global problems (e.g., persistent poverty, depletion of resources and environmental depredation) which, at present, appear to be insoluble. The Paradigm’s potency is comparable to that of the Copernican Revolution which overthrew the concept of an Earth-centred universe and replaced it by a sun-centred one with consequences including today’s political democracy (i.e., the vote) as well as modern astronomy and rocketry. Just as the Revolution introduced a new methodology for astronomy, so the Paradigm introduces a new Methodology for economics which:- establishes that mainstream economics is founded upon fifty nine false, outdated, interconnected assumptions about reality reverses the false assumptions whereon the reversals (or opposites) are easily seen to be true and can therefore form the components of the new Economics with hugely beneficial consequences. The ‘Great Reset’ is a phrase describing the proposals of the World Economic Forum which will concentrate all economic power into the hands of the few rather than putting economic power into the hands of the many. The Paradigm has areas needing development (see Appendix Two). Readers are encouraged to make the development and so forward the progress of the Paradigm as a whole.

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“…These instruments are predominantly modified forms of conventional monetary policy tools such as open market operations, reserve ratio and policy rate. For example, refinance ratio (Siddiqi, 1982) to control the expansion/contraction of the credit, investment accounts or central deposits (Al-Jarhi, 1983) to regulate money supply and boost investments, high-powered money (Chapra, 1983) to finance government for development financing, composite rate of return as a policy rate (Zangeneh and Salam, 1993), equity securities backed by sovereign guarantee (Choudhry and Mirakhor, 1997), mudarabah model (Askari et al, 2014), Qard Hassan (Selim, 2018;Selim and Hassan, 2020), Musharakah model (Adela, 2018) and Istisna (Selim, 2020). However, as these suggested models are never tested, it is not possible to comment on the effectiveness of these tools.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

Monetary transmissions mechanism for Islamic capital markets: evidence from Markov switching dynamic regression approach

Anwer

Sabit

Hassan

et al. 2022

IMEFM

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Purpose This study akims to investigate the effectiveness of expansionary monetary policy for Islamic capital markets by studying the impact of decrease in policy rates on seven Islamic equity indices for the period 1996–2019. The transmission mechanism may be different for sampled indices, as they are exposed to Shariah screening that discards certain business sectors and puts limit on debt in capital structure. Design/methodology/approach This study uses Markov Switching dynamic regression approach of Hamilton (1988). Findings The results show little effectiveness of expansionary monetary policy in both Bear and Bull states, for most of the sample indices. Originality/value To the best of the authors’ knowledge, no study has made use of dynamic models to assess the association between monetary policy rate and Islamic index prices. Similarly, the authors found no work exploring the effectiveness of expansionary monetary policy actions in different regime for Islamic Indices. This investigation is important in unraveling whether, in the presence of limitations on selection of business activity and choice of capital structure, monetary policy can change the market sentiment, or it will be ineffective. The present study fills this gap.

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The Islamic macroeconomic model

Cited by 5 publications

References 0 publications

Interest-free monetary policy and its impact on inflation and unemployment rates

Interest-free monetary policy and its impact on inflation and unemployment rates

JOCRISE Paradigm, Methodology & Economics

Monetary transmissions mechanism for Islamic capital markets: evidence from Markov switching dynamic regression approach

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