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Author: Feng Zhu
Publisher:
ISBN:
Category : Interest rates
Languages : en
Pages : 33
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Book Description
"This paper studies the evolution of the equilibrium real interest rate (ie natural or neutral interest rate) in Asia-Pacific. The author takes an empirical approach to estimate the rate, simple estimates suggest that except for China, and Thailand since 2005, the natural interest rate may have declined substantially in Asian-Pacific economies since the early or mid-1990s, by over 4 percentage points on average. In many economies the rate has turned negative. The tendency has become more accentuated in the 2000s, especially since the onset of the global financial crisis. Yet simple natural interest rate estimates are unreliable, which vary significantly over time and across the economies."--Abstract.
Author: Feng Zhu
Publisher:
ISBN:
Category : Interest rates
Languages : en
Pages : 33
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Book Description
"This paper studies the evolution of the equilibrium real interest rate (ie natural or neutral interest rate) in Asia-Pacific. The author takes an empirical approach to estimate the rate, simple estimates suggest that except for China, and Thailand since 2005, the natural interest rate may have declined substantially in Asian-Pacific economies since the early or mid-1990s, by over 4 percentage points on average. In many economies the rate has turned negative. The tendency has become more accentuated in the 2000s, especially since the onset of the global financial crisis. Yet simple natural interest rate estimates are unreliable, which vary significantly over time and across the economies."--Abstract.
Author: Zhu Feng
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Author: Feng Zhu
Publisher:
ISBN:
Category :
Languages : en
Pages : 87
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Book Description
I study the evolution of the equilibrium real interest rate, also known as the natural or neutral interest rate, in Asia-Pacific. Simple estimates based on a statistical approach suggest that, except for China, and Thailand since 2005, the natural interest rate may have declined substantially in Asia-Pacific economies since the early or mid-1990s, by over 4 percentage points on average. In many economies the rate has turned negative. The tendency has become more accentuated in the 2000s, especially following the onset of the Global Financial Crisis. The natural interest rate appears to vary significantly over time and across economies. Nevertheless, simple natural interest rate estimates are unreliable, and large uncertainties and sizeable heterogeneity in the estimates of the equilibrium real interest rate call for caution as well as monetary policy rules which are robust to such uncertainties. I use frequency-domain techniques to examine the relationship between the long-run component of real interest rate and those of population characteristics, globalisation, and a range of macroeconomic and financial variables (eg credit and asset prices). I estimate spectral and cospectral densities, coherency and the frequency-specific coefficients of correlation and regression proposed by Zhu (2005). The association seems to be broad and strong between the natural interest rate and the low-frequency trend components of demographic and global factors in AsiaPacific, but weak between the natural interest rate and trends in asset prices, creditto-GDP ratio and trend growth in many economies in the region. In most cases, the natural interest rate seems to be correlated with broad measures of long-term financial sector development, and trends in savings rate and investment ratio. Understanding the underlying factors driving changes in each economy's natural interest rate is important for the correct calibration and implementation of monetary policy.Full Publication: 'http://ssrn.com/abstract=2861007' Expanding the Boundaries of Monetary Policy in Asia and the Pacific.
Author: Solikin M. Juhro
Publisher:
ISBN:
Category :
Languages : en
Pages : 6
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Book Description
Feng Zhu (2015) has delivered sound research on the equilibrium real interest rate and its implication for monetary policy in Asia-Pacific countries. I fully concur that the use of the natural interest rate framework to implement monetary policy poses many risks, given the numerous uncertainties surrounding natural rates. However, we should not only consider the precision of estimation but we should also seek to understand how different factors in different situations influence the equilibrium real interest rate and why this is important for monetary policy formulation. Here, I see some room for enhancement that should be incorporated in the paper. My suggestion is that the paper could discuss a broader scope of the monetary policy domain, especially in the post-GFC era, such as the trade-off between internal-external balances, the role of the exchange rate as well as risk perception/behaviour that could potentially impact the equilibrium real interest rate lift-off, as in the case of Indonesia, Malaysia, and some other emerging countries. This would provide a more rigorous assessment of the strategic role of interest rate policy and thus the practical relevance of equilibrium real interest rates in monetary policy formulation.Given the practical usefulness of equilibrium real interest rates, I generally support the arguments proffered by Orphanides and Williams (2002) that recommend against relying excessively on these intrinsically noisy indicators when making monetary policy decisions, and Hamilton et al (2015) who inject more inertia into the monetary policy reaction function. To conclude the discussion on this issue and anchor the theme of the conference, namely “expanding the boundaries of monetary policy”, we should put a proper weight on interest rate policy along with other instruments under a credible central bank policy mix strategy. This implies that the equilibrium real interest rate estimation should not statistically stand alone, since the determination of equilibrium real interest rates should be consistent with the macroeconomic balance and the related policy mix response. Consequently, while there is no guarantee that structural estimates would fare better, I would prefer to address the issue using a structural approach.
Author: Ms.Kalpana Kochhar
Publisher: International Monetary Fund
ISBN: 1451935544
Category : Business & Economics
Languages : en
Pages : 56
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Book Description
This paper reviews macroeconomic developments during the first year of the crisis in east Asia and draws some preliminary policy lessons. The crisis is rooted in the interaction of large capital inflows and weak private and public sector governance. At the same time, macroeconomic adjustment in these countries has resulted in some surprising outcomes, including severe economic contractions, low inflation, and rapid external adjustment. The lessons for crisis resolution include the importance of tight monetary policy early on for exchange rate stabilization, flexible fiscal policy, and comprehensive structural reform. Crises are avoided by prudent macroeconomic policies, diligent bank supervision, transparent data dissemination, strong governance, and forward-looking policymaking, even in good times.
Author: Masahiro Kawai
Publisher: Edward Elgar Publishing
ISBN: 0857933353
Category : Business & Economics
Languages : en
Pages : 321
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Book Description
Asian economies strengthened their monetary and currency management after the Asian financial crisis of 19971998, and came through the global financial crisis of 20072009 relatively well. Nevertheless, the recent global crisis has presented new challenges. This book develops recommendations for monetary and currency policy in Asian economies aimed at promoting macroeconomic and financial stability in an environment of global economic shocks and volatile capital flows. Monetary and Currency Policy Management in Asia draws lessons from crises and makes concrete macroeconomic policy recommendations aimed at minimizing the impacts of an economic and financial downturn, and setting the stage for an early return to sustainable growth. The focus is on short-term measures related to the cycle. The three main areas addressed are: monetary policy measures, both conventional and unconventional, to achieve both macroeconomic and financial stability; exchange rate policy and foreign exchange reserve management, including the potential for regional cooperation to stabilize currency movements; and ways to ease the constraints on policy resulting from the so-called 'impossible trinity' of fixed exchange rates, open capital accounts and independent monetary policy. This is one of the first books since the global financial crisis to specifically and comprehensively address the implications of the crisis for monetary and currency policy in emerging market economies, especially in Asia. Presenting a broad menu of policy options for financial reform and regulation, the book will be of great interest to finance experts and policymakers in the region as well as academics and researchers of financial and Asian economics as well as economic development.
Author: Mr.Serkan Arslanalp
Publisher: International Monetary Fund
ISBN: 148437164X
Category : Social Science
Languages : en
Pages : 23
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Book Description
Demographic developments have been regarded as one important cause of the long-term movement in global interest rates. This paper provides empirical evidence of the relationship between demographics and interest rates over a wide sample of advanced and emerging market economies. It also finds that capital account openness limits the direct sensitivity of a country’s interest rates to its own demographics. The results suggest that future demographic developments will continue to apply downward pressure on the interest rates in Asia which foresees a rapid aging.
Author: M. Ayhan Kose
Publisher: World Bank Publications
ISBN: 1464815453
Category : Business & Economics
Languages : en
Pages : 403
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Book Description
The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.
Author: Robin Ellen Stonecash
Publisher: Cengage AU
ISBN: 0170382648
Category : Business & Economics
Languages : en
Pages : 548
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Book Description
The brief and student-friendly approach of this book boils economics down to its essentials, by considering what is truly important for students to learn in their first course in economics. In keeping with the authors' philosophy of showing students the power of economic tools and the importance of economic ideas, this edition pays careful attention to regional and global policies and economic issues ' including the impacts of the ongoing global financial crisis, inflation, unemployment, interest rates, and monetary and fiscal policy. Continuing global financial uncertainty and the current state of the Australian economy provide a constant supply of new material, re-evaluated models, and policy changes and updates for the Principles of Macroeconomics text. The book emphasises the material that students should and do find interesting about the study of the economy, resulting in a focus on applications and policy, and less on formal economic theory. Principles of Macroeconomics, 7e encourages students to make their own judgements by presenting both sides of the debate on five controversial issues facing policymakers: the proper degree of policy activism in response to the business cycle, the choice between rules and discretion in the conduct of monetary policy, the desirability of reaching zero inflation, the importance of balancing the government's budget, and the need for tax reform to encourage saving.
Author: Mr.Fei Han
Publisher: International Monetary Fund
ISBN: 1498301142
Category : Social Science
Languages : en
Pages : 31
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Book Description
Japan’s aging and shrinking population could lower the natural rate of interest and, together with low inflation expectations, challenge the Bank of Japan’s efforts to reflate the economy. This paper uses a semi-structural model to estimate the impact of demographics on the natural rate in Japan. We find that demographic change has a significantly negative impact on the natural rate by lowering trend potential growth. We also find that the negative impact has been increasing over time amid stronger demographic headwinds. These findings highlight the importance of boosting potential growth to offset the negative demographic impact and lift the natural rate in Japan.
