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Europe > Ireland

You are looking at 1 - 2 of 2 items for :

  • Type: Journal Issue x
  • Economic policy; nternational cooperation x
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Cover IMF Working Papers
Revisiting the Link Between Finance and Macroeconomic Volatility
Ms. Era Dabla-Norris
and
Mr. Narapong Srivisal
This paper examines the impact of financial depth on macroeconomic volatility using a dynamic panel analysis for 110 advanced and developing countries. We find that financial depth plays a significant role in dampening the volatility of output, consumption, and investment growth, but only up to a certain point. At very high levels, such as those observed in many advanced economies, financial depth amplifies consumption and investment volatility. We also find strong evidence that deeper financial systems serve as shock absorbers, mitigating the negative effects of real external shocks on macroeconomic volatility. This smoothing effect is particularly pronounced for consumption volatility in environments of high exposure - when trade and financial openness are high - suggesting significant gains from further financial deepening in developing countries.
Keywords:
WP; yes; external shock; consumption volatility; GDP; Financial Depth; Macroeconomic Volatility; volatility regression; investment volatility; consumption decision; per-capita GDP; standard deviation; Consumption; Private consumption; Credit; Terms of trade; Financial sector development; Global
Cover IMF Staff Papers
IMF Staff papers: Volume 30 No. 3
International Monetary Fund. Research Dept.
This paper examines the conditions under which the monetary authorities of a large industrial country can influence the exchange rate while keeping the growth rate of the money stock on a predetermined target. Monetary policy in the large industrial countries has in recent years focused primarily on the achievement of predetermined growth rates for monetary aggregates. This study treats such intervention as an example of a broader class of combination policies that, for convenience, may be called “sterilized policies.” In order to determine whether sterilized policies may be expected to be effective, this study examines the role of several specific types of monetary policy instrument in the context of a portfolio-balance model of financial markets. Each of the major countries employs a unique combination of policy instruments, ranging from market-oriented systems largely free of regulation to systems that rely heavily on quantitative ceilings and regulated interest rates. It is shown that sterilized changes in at least three of these instruments, as well as exchange market intervention, will have predictable effects on the exchange rate. The potentially effective instruments are reserve requirements on nonresident deposits or on deposits that are included in the targeted monetary aggregate, and controls on interest rates that are payable on such deposits.
Keywords:
SP; cover book; bibliography; activities of the International Monetary Fund; selected bibliography; periodical article; expansionary fiscal policy; Exchange rates; Fiscal stimulus; Real exchange rates; Terms of trade; Exports; Australia and New Zealand