Alternative Monetary Targets,Instruments and Future Monetary Policy Frameworks

ABSTRACT

This article expands on the debate of whether merely controlling inflation can be considered a good outcome in terms of monetary policy, discussing proposals for adopting alternative monetary targets (e.g., price level, nominal GDP), alternative instruments (e.g., monetary finance, central bank digital currencies), for enlarging central banks' mandates (e.g., incorporating employment, wages, inequality, environmental objectives) and for the design of future monetary policy frameworks.

We argue that in the coming years, central banks should not simply maintain their pre-2008 standards by de-implementing unconventional monetary policies. Instead, they must take advantage of their past and recent experiences in order to improve, under an evolutionary perspective, future monetary policy and financial stability frameworks. Based on this, measures implemented since the 2008 crisis would have three possible treatments in new frameworks: i) be discarded, due to their predominantly adverse effects; ii) not be regularly implemented, but be used as backstop mechanisms if needed; iii) be incorporated as regular measures of monetary policy/financial stability frameworks. Accordingly, monetary and financial stability authorities will increasingly need to evolve and engage in a continuously adaptive and innovative process in order to face challenges posed by financial markets that are becoming more dynamic, innovative, complex, interconnected and globalised.     

Unemployment, Wage Developments and the Economic Policy Mix in Europe

The paper considers the importance of wage formation for the policy mix in Europe. When monetary policy is committed to price stability, unit labour costs are a crucial factor in achieving this objective. Traditional Phillips curve or modern NAIRU models focus on labour market flexibility to achieve coherent wage developments because they take a short run perspective where the capital stock is fixed. However, in a long term perspective, the capital stock adjusts to profit opportunities which depend on the portfolio choices of investors which in turn are influenced by monetary policy. The time path of the price level depends then on a trend that is set by unit labour costs and a mean reverting profit mark-up that is dependent on capital costs. Monetary policy can become growth-supporting, if unit labour costs remain consistent with the central bank's price objective.     

货币政策、外部冲击与通货膨胀

利用2001年1月—2013年6月的月度数据,构建DCC-MVGARCH模型分析用货币供应量表征的我国内部因素和用汇率和国际原油价格表征的外部因素对我国通货膨胀率的动态影响。研究结果表明:我国通货膨胀既源于内部调整,也受到外部冲击的影响;内部因素中的货币供应量增长率是影响我国通货膨胀水平的主要决定因素;相对而言,外部因素对通货膨胀水平的影响不大。     

(Non)optimality of the Friedman rule and optimal taxation in a growing economy with imperfect competition

This paper shows that if capital generates production externality, there exists a wedge between returns to money and to capital, driving the Friedman rule is not optimal. However, in the absence of capital externality, the Friedman rule may be valid even under imperfect competition.     

关于我国货币政策促进经济增长的研究

人民银行货币政策目标是:保持人民币币值稳定并以此促进经济增长,所以搞清楚货币政策与通货膨胀、经济增长的关系就十分必要。通过计量分析可以得出:货币供应量M1的增长是推动GDP增长的主要因素,财政支出增长不是推动GDP增长的因素,但是不能否定其在反经济危机中的巨大作用;货币供应量M1的增长是推动CPI增长的主要因素;在制定货币供应量政策时,既要考虑到推动GDP增长的目的,也要受到CPI上涨的制约,需要在二者之间权衡;在制定利率政策时要研究均衡的利率,实际利率要向均衡利率靠近,并且要随着经济情况的变化及时调整,以达到最大的资本积累量,保证我国的长期经济增长。     

货币政策透明度的结构与体系的非完整性

本文通过分析货币政策透明度基本结构的合理性,以及三类透明度所发挥的不同作用,提出透明度建设不仅仅是透明程度的提高,更要注重透明度体系的完善.并且,针对我国目前不存在目标透明度,也不能建立目标透明度的事实,建议注重知识透明度的建设及其作用的发挥,使市场主体可以深入学习和理解央行的经济模型和货币政策决策规则,从而发挥货币政策透明度应有的作用.     

Fiscal Policy,Economic Integration and Unemployment

In this paper fiscal policy is examined for an open economy characterized by unemployment due to efficiency wages. We allow for capital and firm mobility in a model where the government chooses the level of wage, source-based capital and profit taxation. The taxing choices of governments are analyzed in scenarios which differ with respect to the constraints imposed on the set of available taxes and on the mobility of firms. As a general result, the welfare loss from labor market imperfections increases when tax bases become internationally mobile, which suggests an increasing relevance of domestic labor-market reforms when tax bases become global.     

我国货币政策中介目标研究——一个文献综述

近年来,一些西方发达国家相继放弃了货币供应量目标,转向了利率、通货膨胀等目标,进而在我国也引发了货币供应量能否继续充当货币政策中介目标的争论.本文认为,尽管大多数实证研究均已表明货币供应量作为中介目标的有效性正不断降低,然而从我国当前的经济金融发展情况来看,选择利率或通货膨胀目标还缺乏可行性.因此,我国面临的现实选择只能是继续以货币供应量为目标,同时稳步推进金融体系、金融制度的改革,为中介目标的转变奠定基础.     

渐进性通货膨胀与我国货币政策失灵——以区域金融差异为视角

作为应对通货膨胀的主要宏观调控措施,货币政策历来都受到各国中央银行的重视.但是,从2006年开始的本轮通货膨胀中,中国政府屡次动用紧缩性货币政策的结果是消费物价指教的渐进攀升.本文从中国区域金融差异的角度分析了渐进性通货膨胀的原因,并在分析全国统一货币政策失灵机制的基础上为将来可能的区域性货币政策的实施提出了相关建议.     

实证分析:我国菲利普斯曲线失灵与应对财政政策就业效应

1998年至今我国经济呈现出GDP高速增长的态势,但是这种经济的高速增长伴随着的是宏观经济运行的两大不稳定因素,一是物价持续上涨,二是就业形势日益严峻,宏观经济呈现出菲利普斯曲线失灵的特点。本文在运用GDP增长率、失业率和通货膨胀率等相关指标来论证、描述和解析我国菲利普斯曲线失灵现象的基础上,主要对近几年我国政府在应对菲利普斯曲线失灵时所采取的相关反失业财政政策及其就业效应进行了分析,从而为我国政府今后如何继续完善和实施治理失业的财政政策起到一个抛砖引玉的作用。     

中国宏观经济状况与货币政策抉择——基于后危机时代的视角

积极的货币政策帮助中国经济在危机中和后危机时代保持稳定而较快的增长。然而与之相随的是物价上涨、通胀压力显现和外部的人民币升值压力。当前中国经济的主要矛盾是防通胀,保增长的压力较小。而且,由于中国有管理的浮动汇率制度和对资本项目下货币流动的严格管理制度,利率上升本身不会对人民币升值带来显著影响,也不会导致热钱的大量流入。     

Testing Commitment Models of Monetary Policy in China

In the past decade Chinese inflation was not high on average, but it was quite volatile. Back in the 1980s and 1990s, high inflation was a very real problem. What explains the inflationary dynamics in China? In particular, does monetary policy account for the substantial run-ups of inflation, followed by the equally substantial dis-inflation? In the absence of commitment technologies, the monetary authorities may create surprise inflation to achieve higher growth, while private agents would anticipate that and adjust their decisions accordingly, leading to accelerated inflation without a real impact. Do these types of simple time-inconsistency models of monetary policy explain the dynamic pattern of inflation in China? I show that the long-run and short-run restrictions imposed by discretionary policy, when the time-inconsistent policymaker has a desire to push output above potential, are largely rejected by the data. The estimates of the inflation bias under discretion when the policymaker is asymmetrically averse to recessions are not statistically significant either. The analysis contributes to the understanding of Chinese monetary policy and its inflationary implications and also points to the need of further investigation of inflationary behavior during the economic transition.     

How Will EMU Affect Inflation and Unemployment in Europe?

This paper explores how European Monetary Union will change the wage setting behavior of national labor unions. We derive the impact of national inflation aversion and labor militancy on the performance of national labor markets under different monetary arrangements. A common central bank raises inflation and unemployment if it acts as conservatively as national central banks. However, unemployment falls in countries that previously tied their monetary policy to the Bundesbank. We also examine the composition of EMU and the influence of national labor market legislation.
JEL Classification : E 24; F 02; F 33     

Monetary Policy and Market Power in Banking

Applying a spatial competition model to banking, we analyze the effects of the choice of a monetary policy rule by the central bank on banks market power as measured by the Lerner index. We show that a procyclical monetary policy may reinforce the countercyclical movement of the Lerner index. That is, this measure of competitiveness of the banking sector may vary more over the business cycle due to the monetary policy rule.JEL classification: G21, E52, L13.Acknowledgements The author thanks Hans Degryse, Hans van Ees, Marco Haan, Eko Riyanto, Bert Schoonbeek, Elmer Sterken, three anonymous referees, and participants of the EARIE 2001 conference (Dublin), the NAKE Day 2002 (Amsterdam), and a seminar at Ghent University for their constructive comments.revised version received November 11, 2003     

Environmental Policy in Open Economies and Monopolistic Competition

This paper analyses the implications of international trade for non-cooperative environmental policy in the case of local production externalities. A particular focus is on the potential effects of regulations on the variety of goods and the resulting international spillover caused by trade. A tougher domestic standard negatively affects the utility of the households abroad, since such a policy reduces their variety of imports (due to fewer domestic product inventions) or their consumption of each imported brand (due to higher import prices). Ignoring the negative spillover, non-cooperative governments implement inefficiently strict standards in equilibrium. In contrast to this clear-cut inefficiency result, the impact of international trade on the state of the environment is ambiguous.     

Fiscal Policy,Monetary Policy and the Mechanics of Modern Clearing and Settlement Systems

Thomas Palley, Eric Tymoigne and Randall Wray recently debated neo-Chartalism in this journal. This article argues that the mechanics of modern clearing and settlement systems is important to understanding this debate. In the neo-Chartalist framework taxes and bond issuance function as part of monetary policy; it is an alternative method for draining reserves to obtain the overnight target rate. Abba Lerner’s Chartalist framework is much clearer on public finance, noting that the federal government can use alternative financing methods to pay for expenditures. Palley’s concerns with central bank ‘money financing’ and inflation are unpersuasive. The Old Keynesian ‘budget restraint– high-powered money relation’ offers limited insight into modern clearing and settlement systems. The article concludes that policymakers should embrace Lerner’s advice and view ‘money printing’ as a normal policy instrument to support functional finance.     

Selecting Your Inflation Targeters: Background and Performance of Monetary Policy Committee Members

Abstract. This paper starts by describing the composition of monetary policy committees (MPCs) in inflation‐targeting and non‐targeting countries. The experience of MPC members on their inflation performance is then compared, opposing inflation targeters with non‐targeters. Our sample covers the major Organization for Economic Cooperation and Development countries, in the period 1999–2008. Our results first show that MPCs are different in inflation‐targeting (versus non‐targeting) countries. They also reveal that policy‐makers' backgrounds influence inflation, and that the influence of MPCs' experience is much greater in inflation‐targeting countries, while size effects are more important for committees that do not target inflation.     

Globalization, Financial Volatility and Monetary Policy

Recently it has often been claimed that globalization eases the job of central banks as it helps to tame inflation. This is used to argue that central banks (particularly the ECB, referring to the objectives as laid down in the EU Treaty) could or should reduce their efforts in the fight against inflation in favor of supporting the general economic policies of the governments. This paper takes a critical look at this argument, pointing to the structural changes associated with globalization and to the corresponding increase in uncertainty by which the central banks are affected. As an example of this, the increase in financial volatility is analyzed and explained as the result of optimal portfolio allocation, and its implications for monetary policy are discussed.     

EMU in Reality: The Effect of a Common Monetary Policy on Economies with Different Transmission Mechanisms

The theory of optimal currency areas states that a single currency zone should have symmetry of shocks and structures across regions. Research on monetary union in Europe has either assumed these conditions to hold close enough not to cause problems, or has focussed on asymmetries in shocks. But what if economic structures and/or market responses differ between countries or regions? This paper examines the consequences of a single monetary policy when there are asymmetries in i) the monetary transmissions; ii) the wage/price transmissions; and iii) private sector asset holdings. We find the first and last destabilise the business cycle, and put countries out of phase with one another in a way that cannot be corrected by deficit constrained fiscal policies. The effect is to delay convergence.     

Causes of Inflation in Europe, the United States and Japan: Some Lessons for Maintaining Price Stability in the EMU from a Structural VAR Approach

Price stability being among the primary goals of EMU monetary policy,it should be interesting to analyse thefactors that led to the disinflationarydevelopments of the last years. Using a structural VAR approach withlong-run identifying restrictions derived from an open-economy macromodel, various factors of inflation for Austria, Germany, Italy, the UnitedKingdom, the United States and Japan and the extent to which they havecontributed to inflation are analysed. These factors are energy price shocks, supply shocks, wage setting influences, demand and exchange rate disturbances and money supply surprises. The latter three are also used to calculate core inflation. Within a smaller model for aggregate EMU data, supply and demand influences are analysed. While supply and demand factors have generally contributed to the inflation decline, monetary policy, enhanced competition, low energy prices and moderate wage setting are featuring most prominent in the recent disinflation process.