Australian money supply analysis: The relationship between the monetary base,secondary reserves and the money supply

Utilising the criteria of predictability, stability over time, and instrument stability this paper examines the relationship between the reserve base and the money supply in Australia. Various modifications to the money supply function are made to incorporate the influence of direct monetary controls, of the overdraft lending system, and of the increased substitutability of government securities for high powered money arising from the Reserve Bank of Australia's policy of pegging government security yields. Doubt is cast on the ability of the Australian authorities to control the primary monetary aggregates on a short-run basis.     

The role of money supply shocks in the short-run demand for money

Previous money-demand models are either inconsistent with contemporaneous adjustment of the price level to expected changes in the nominal money supply or imply implausible interest-rate fluctuations in response to innovations in nominal money. We propose a shock-absorber money- demand model in which money supply shocks affect the synchronization of asset transactions and so engender a temporary increase or decrease in desired money holdings. Expected changes do not engender such fluctuations in real money inventories. In simultaneous estimates for eight industrial countries, the shock-absorber model proved empirically superior.     

The structure of expectations of the weekly money supply announcement

This paper examines the structure of expectations of the weekly money supply announcement in the late 1970s. The data used are from a weekly telephone survey of money market participants. The rationality and structure of expectations are explored with the data organized in three ways: the mean response to each weekly survey, the pooled sample of individual responses, and time series of responses by each individual in the survey. The effect of data aggregation on rationality tests is investigated. The structure of the expectations data are also examined and it is found that both strong regressive influences and adaptive learning characterize the data.     

Correspondent balances,services, and the money supply

This paper investigates the money supply process on a microeconomic level by developing an inventory-theoretic model of commercial bank reserves, correspondent balances, and correspondent services; by deriving the comparative-static properties of the model for member and non-member banks; and by incorporating these properties into a stochastic money supply framework. In general, correspondent balances and services were found to have mixed effects on the reserve-requirement and interest-rate sensitivities of both the expected value and the variance of the money supply, but most of this ambiguity should eventually be reduced by the Monetary Control Act of 1980.     

US money announcements and covered interest parity: The case of Japan

This paper examines the effects of US money announcements on dollar-and yen-denominated securities in their respective onshore markets. The effects are consdered over several periods corresponding to possible US and Japanese policy regimes. The consistency of the responses is further examined by testing whether the responses of dollar-denominated securities, yen-denominated securities, the spot yen/dollar exchange rate, and the forward yen/dollar exchange rate violate covered interest parity. Given the results of previous studies, the evidence suggests that restrictions on capital mobility in Japan have not allowed complete international integration of Japanese financial markets.     

The effects of relative price changes on the household's demand for money

In examining the economic response to changes in the rate of inflation, models of the demand for money have traditionally assumed that all prices change equiproportionately. This paper alternatively examines the effect on the demand for money of relative price changes. The analysis develops a choice theoretic framework of household behavior by combining a utility maximization framework with the inventory approach to the transactions demand for money. A significant result of the analysis is that the net effect of a change in relative prices on the household's money holding depends on the purchase frequencies and price elasticities of the relevant commodities.     

British coal and the privatising of electricity supply

Since 1979, for much of the time, British Coal has, in effect, been subsidised by electricity consumers as well as taxpayers. Unless the privatisation of the electricity supply industry is a great deal more radical than at present seems likely, its effect may well be to introduce competition into the coal industry more than into electricity supply.     

Demand and supply functions for money in Canada: Some further evidence

The demand and supply functions for money in Canada are estimated in a simultaneous-equation model format in which the supply of money is considered endogenous. The results indicate that the important determinants of the demand for money are income, short-term interest rate and lagged real cash balance variables. Wealth is an unimportant explanatory variable in money demand thus rejecting the hypothesis that an increase in outside wealth increases the demand for money. The monetary base and cash reserve ratio are important explanatory variables in the money supply function and play a direct role in monetary control.     

Interest rate and liquidity risk management and the European money supply process

The monetary setup of the European Central Bank (ECB) centers around short-term securities repurchase agreements (repos) which ensure the flexibility of its money market management. However, a flexible repo-based monetary policy exposes banks to both interest rate risk and liquidity risk. This paper investigates the consequences for the money supply process and the conduct of monetary policy. We develop a loan supply model with maturity transformation and show how banks respond when future monetary policy is expected to become tighter or more uncertain. Our results also shed light on the rationale behind the use of different pricing rules in the ECB's repo auctions.     

Empirical determinants of the relative yields on taxable and tax-exempt securities

Yields on short-term prime-grade municipals vary through time in relation to after-corporate-tax yields on short-term U.S. Treasury securities. The pattern is not related to the default premium in municipal yields or to the historical ceiling on bank deposit rates (Regulation Q). However, there is a strong link to the default premium in corporate yields and to municipal holdings by large commercial banks. These findings suggest that taxable and tax-exempt markets are linked both by the capital-structure decisions of firms and by the tax-arbitrage activities of banks.     

论我国货币供求变化对货币政策的影响

本文认为我国货币政策效力下降的原因在于：货币供给扩张受到限制和货币流通速度降低。商业银行和企业行为的变化增强了货币供给的内生性,降低了中央银行对货币供给的影响力;由于“流动性陷阱”导致了货流通速度降低,使货币供给增加不能相应提高总需求。通过建立一个现代的凯恩斯货市场需求的模型,重新分析了“流动性陷阱。     

The long-run performance of initial public offerings and its determinants: the case of China

Existing research finds poor long-run performance of Initial Public Offerings (IPOs), particularly in the US. Using company IPO data from China’s Shanghai Stock Exchange, we find comparable levels of underperformance. In line with US results, initial overoptimism and the size of the offer are important explanatory factors for this underperformance. Additional variables include the earnings per share prior to listing, the decision to switch investment banks at the time of issue and whether the firm issues shares that can be purchased by foreign investors. These factors suggest that firms in China are able to manipulate the issue process. In the context of Chinese economic reforms, of particular note is the positive performance impact of the government shareholding after issue, which supports a signal argument in relation to continuing government support. As a result, we provide an interesting insight into the influence of the regulatory environment and economic transition on the long-run performance of IPOs in China.

Gap in relative importance of service activities closed

Conclusion Overall it is evident that the relative importance of services and service activity trends in the USA and west Germany is very similar. In other words the activity structure in Germany is indeed “modern”. Also in highly productive areas of production, value adding largely takes the form of service activities. Thus the employment problem in Germany results not from outdated activity structures; the causes are rather those macroeconomic reasons to which the DIW has repeatedly drawn attention⁷. German economic policy must ensure that the framework of macroeconomic conditions is changed to allow jobs to be created. Whether these jobs are created in certain branches or activities is of secondary importance. Having said this, in Germany, too, it is to be expected that more than two out of every three new jobs created will be service jobs. Even so, a quarter of new jobs will be created in industry.     

The joint determinants of cash holdings and debt maturity: the case for financial constraints

We examine the joint choices of cash holdings and debt maturity for a large sample of firms for the 1985–2013 period. We find that there is a positive relation between debt maturity and cash holdings. Our results hold after taking into account endogeneity among leverage, debt maturity, and cash holding. We posit that this positive relationship will be found among firms facing financial constraints and we find support for this hypothesis. Our results are robust after we control for agency problems, international taxation, bank loan liquidity covenants and default risk.