nep-mon New Economics Papers
on Monetary Economics
Issue of 2019‒03‒25
29 papers chosen by
Bernd Hayo
Philipps-Universität Marburg

  1. Identifying and estimating the effects of unconventional monetary policy in the data: How to do It and what have we learned? By Barbara Rossi
  2. Information insensitivity, collateral flows and the logic of financial stability By A. Mantovi
  3. The effects of conventional and unconventional monetary policy on exchange rates By Atsushi Inoue; Barbara Rossi
  5. The Welfare Cost of Ináation with Banking Time By Max Gillman
  6. Expectations and the term premium in New Zealand long-term interest rates By Michael Callaghan
  7. (Un)conventional Policy and the Effective Lower Bound By De Fiore, Fiorella; Tristani, Oreste
  8. The effects of conventional and unconventional monetary policy: A new approach By Atsushi Inoue; Barbara Rossi
  9. Optimal Time-Consistent Monetary, Fiscal and Debt Maturity Policy By Eric M. Leeper; Campbell B. Leith; Ding Liu
  10. Three Dimensions of Central Bank Credibility and Inferential Expectations: The Euro Zone By Timo Henckel; Gordon D. Menzies; Peter Moffat; Daniel J. Zizzo
  11. Why the Fuss? - Friedman (1968) After Fifty Years By David Laidler
  12. The Neo-Fisherianism to Escape Zero Lower Bound By Chattopadhyay, Siddhartha
  13. Inflation Expectations: Review and Evidence By M. Ayhan Kose; Hideaki Matsuoka; Ugo Panizza; Dana Vorisek
  14. Market Structure and Indeterminacy of Stationary Equilibria in a Decentralized Monetary Economy By Kubota, So
  15. How Monetary Policy Shaped the Housing Boom By Itamar Drechsler; Alexi Savov; Philipp Schnabl
  16. The real effects of money supply shocks: Evidence from maritime disasters in the Spanish Empire By Adam Brzezinski; Yao Chen; Nuno Palma; Felix Ward
  17. Effects of a Mandatory Local Currency Pricing Law on the Exchange Rate Pass-Through By Castellares, Renzo; Toma, Hiroshi
  18. State-Dependent Effects of Monetary Policy: The Central Bank Information Channel By Paul Hubert
  19. On Staggered Prices and Optimal Inflation By Asier Aguilera-Bravo; Miguel Casares Polo
  20. On the Real Determinacy and Indeterminacy of Stationary Equilibria in Monetary Models By Kazuya Kamiya
  21. Calibrating GDP fan charts using probit models with a comparison to the approaches of the Bank of England and Riksbank By David Turner; Thomas Chalaux
  22. Granger Predictability of Oil prices after the Great Recession By Szilard Benk; Max Gillman
  23. Nominal GDP Targeting with Heterogenous Labor Supply By Bullard, James; Singh, Aarti
  24. Measuring consumer inflation in a digital economy By Marshall Reinsdorf; Paul Schreyer
  25. Modelling the Demand for Euro Banknotes By António Rua
  26. Money and Central Bank Digital Currency By Shirai, Sayuri
  27. Missing money, missing policy and Resource Adequacy in Australia's National Electricity Market By Paul Simshauser
  28. Digitales Zentralbankgeld als neues Instrument der Geldpolitik By Andreas Hanl; Jochen Michaelis

  1. By: Barbara Rossi
    Abstract: How should one identify monetary policy shocks in unconventional times? Are unconventional monetary policies as e§ective as conventional ones? And has the transmission mechanism of monetary policy changed in the zerolower bound era? The recent Önancial crisis led Central banks to lower their interest rates in order to stimulate the economy, and interest rates in many advanced economies hit the zero lower bound. As a consequence, the traditional approach to the identiÖcation and the estimation of monetary policy faces new econometric challenges in unconventional times. This article aims at providing a broad overview of the recent literature on the identiÖcation of unconventional monetary policy shocks and the estimation of their e§ects on both Önancial as well as macroeconomic variables. Given that the prospects of slow recoveries and long periods of very low interest rates are becoming the norm, many economists believe that we are likely to face unconventional monetary policy measures often in the future. Hence, these are potentially very important issues in practice.
    Keywords: Shock identification, VARs, zero lower bound, unconventional monetary policy, monetary policy, external instruments, forward guidance.
    JEL: E4 E52 E21 H31 I3 D1
    Date: 2018–01
  2. By: A. Mantovi
    Abstract: The relevance of information dynamics and collateralization is well established for modern financial markets. Still, when it comes to first principles of financial stability, questions of transparency seem to overshadow the relevance of the specificities of networks of counterparties. The paper is meant to deepen the connection between the principle of “no questions asked” on collateralized debt (Holmström, 2015) and the stabilizing properties of collateral flows (Mehrling, 2012). Conceptual and empirical implications are thoroughly discussed, and can be conjectured to represent lines of progress for the theory of money.
    Keywords: Money; Financial Stability; Information Sensitivity; Market Design; Equilibrium Selection; Political Economy
    JEL: E59 G01 G18 G28
    Date: 2019
  3. By: Atsushi Inoue; Barbara Rossi
    Abstract: What are the effects of monetary policy on exchange rates? And have unconventional monetary policies changed the way monetary policy is transmitted to international financial markets? According to conventional wisdom, expansionary monetary policy shocks in a country lead to that country's currency depreciation. We revisit the conventional wisdom during both conventional and unconventional monetary policy shocks as changes int he whole yield curve due to unanticipated monetary policy moves and allows monetary policy shocks to differ depending on how they affect agents' expectations about the future path of interest rates as well as their perceived effects on the riskiness/uncertainty in the economy. Our empirical results show that: (i) a monetary policy easing leads to a depreciation of the country's spot nominal exchange rate in both conventional and unconventional periods; (ii) however, there is substancial heterogeneity in monetary policy shocks over time and their effects depend on the way they affect agents'expectations; (iii) we find favorable evidence to Dornbusch's (1976) overshooting hypothesis; (iv) changes in expected real interest rates play an important role in the transmission of monetary policy shocks.
    Keywords: Exchange rates, Zero-lower bound, unconventional monetary policy, forward guidance.
    JEL: F31 F37 C22 C53
    Date: 2018–12
  4. By: Artem V. Efimov (National Research University Higher School of Economics)
    Abstract: The purpose of this paper is finding a method of calculating or at least reliably estimating the money supply in the 1710s’ Russia. The estimation is based on Gresham’s Law that states: “Bad money drive out good money.” The “good” and “bad” monies of Petrine era are identified. I argue that the “good” money was driven out by 1705 and, therefore, the emission of “bad” money in 1705–10 increased money supply. The increase is estimated to be about 40 percent. This conclusion calls for a further investigation of price dynamics of the period to determine effects of the increase.
    Keywords: Peter the Great’s reforms, monetary reform, money supply
    JEL: N1
    Date: 2019
  5. By: Max Gillman (Department of Economics, University of Missouri-St. Louis)
    Abstract: The paper presents the welfare cost of inflation in a banking time economy that models exchange credit through a bank production approach. The estimate of welfare cost uses fundamental parameters of utility and production technologies. It is compared to a cash-only economy, and a Lucas (2000) shopping economy without leisure, as special cases. The paper estimates the welfare cost of a 10% inflation rate instead of zero, for comparison to other estimates, as well as the cost of a 2% inflation rate instead of a zero inflation rate. The zero rate is specified as the US inflation rate target in the 1978 Employment Act amendments. The paper provides a conservative welfare cost estimate of 2% inflation instead of zero at $33 billion a year. Estimates of the percent of government expenditure that can be financed through a 2% vs. zero inflation rate are also provided.
    Keywords: Euler equation, interest rates, inflation, banking, money demand, velocity, price-theoretic, marginal cost, productivity shocks, great recession.
    JEL: E13 E31 E43 E52
    Date: 2018–07
  6. By: Michael Callaghan (Reserve Bank of New Zealand)
    Abstract: As a small, indebted economy, it is important to understand how financial market shocks in the rest of the world transmit to New Zealand. A key channel is long-term interest rates, which are highly correlated across countries. A sharp increase in international long-term bond yields would affect a range of New Zealand interest rates, including mortgage rates. I use a term structure model to analyse the drivers of long-term interest rates in New Zealand. Movements in long- term interest rates can be decomposed into a component that reflects expectations about the future path of short-term policy rates, and changes in the term premium. The term premium is the compensation investors require for the risk of holding interest rate securities. The term premium in New Zealand 10-year bond rates has trended down since the 1990s. Stable inflation, a strong domestic economy, and low global bond market volatility are likely to have contributed to a low term premium in recent years. The New Zealand term premium is highly correlated with foreign yields, which may present some challenges for domestic monetary policy. Specifically, an increase in the term premium, even if driven from overseas, would be associated with a fall in domestic inflation and activity over the following year. Monetary policy may sometimes need to offset term premium shocks to achieve domestic macroeconomic objectives. The model presented in this note provides estimates of the drivers of long-term yields that can be monitored at a high frequency, and a framework for thinking about movements in long-term interest rates and their implications for policymakers.
    Date: 2019–03
  7. By: De Fiore, Fiorella; Tristani, Oreste
    Abstract: We study the optimal combination of interest rate policy and unconventional monetary policy in a model where agency costs generate a spread between deposit and lending rates. We show that credit policy can be a powerful substitute for interest rate policy. In the face of shocks that negatively affect bank monitoring efficiency, unconventional measures insulate the real economy from further deterioration in financial conditions and it may be optimal for the central bank not to cut rates to zero. Thus, credit policy lowers the likelihood of hitting the zero bound constraint. Reductions in the policy rates without non-standard measures are sub-optimal as they force savers to inefficiently change their intertemporal consumption patterns.
    Keywords: asymmetric information; Optimal monetary policy; unconventional policies; zero-lower bound
    JEL: E44 E52 E61
    Date: 2019–03
  8. By: Atsushi Inoue; Barbara Rossi
    Abstract: We propose a new approach to analuze economic shocks. Our new procedure identifies economic shocks as exogenous shifts in a function; hence, we call the "functional shocks". We show how to identify such shocks and how to trace their effects in the economy via VARs using a procedure that we call "VARs with finctional shocks". Using our new procedire, we address the crucial question of studying the effects or monetary policy by identifying monetary policy shocks as shifts in the shole term structure of government bond yields in a narrow window of time around monetary policy announcements. Our identification sheds new light on the effects of monetary policy shocks, both in conventional and unconventional periods, and shows that traditional identification procedires may miss important effects. We find that, overall, unconventional monetary policy has similar effects to conventional expansionary monetary policy, leading to an increase in both output growth and inflation; the response is hump-shaped; peaking around oneyear to one year and a half after the shock. The new procedire has the advantage of identifying monetary policy shocks during both conventional and unconventional monetary policy periods in a unified manner and can be applied more generally to other economic shocks.
    Keywords: Shock identification, VARs, zero-lower bound, unconventional monetary policy, forward guidance.
    JEL: E4 E52 E21 H31 I3 D1
    Date: 2018–10
  9. By: Eric M. Leeper; Campbell B. Leith; Ding Liu
    Abstract: The textbook optimal policy response to an increase in government debt is simple—monetary policy should actively target inflation, and fiscal policy should smooth taxes while ensuring debt sustainability. Such policy prescriptions presuppose an ability to commit. Without that ability, the temptation to use inflation surprises to offset monopoly and tax distortions, as well as to reduce the real value of government debt, creates a state-dependent inflationary bias problem. High debt levels and short-term debt exacerbate the inflation bias. But this produces a debt stabilization bias because the policy maker wishes to deviate from the tax smoothing policies typically pursued under commitment, by returning government debt to steady-state. As a result, the response to shocks in New Keynesian models can be radically different, particularly when government debt levels are high.
    JEL: E62 E63
    Date: 2019–03
  10. By: Timo Henckel (Australian National University & Centre for Applied Macroeconomic Analysis); Gordon D. Menzies (University of Technology Sydney & Centre for Applied Macroeconomic Analysis); Peter Moffat (University of East Anglia); Daniel J. Zizzo (University of Queensland & Centre for Applied Macroeconomic Analysis)
    Abstract: We use the behavior of inflation among Eurozone countries to provide information about the degree of credibility of the European Central Bank (ECB) since 2008. We define credibility along three dimensions-official target credibility, cohesion credibility and anchoring credibility - and show in a new econometric framework that the latter has deteriorated in recent history; that is, price setters are less likely to rely on the ECB target when forming inflation expectations.
    Keywords: credibility; infl?ation; expectations; anchoring; monetary union; inferential expectations
    JEL: C51 D84 E31 E52
    Date: 2019–02–21
  11. By: David Laidler (University of Western Ontario)
    Abstract: Friedman’s Presidential Address was about “The Role of Monetary Policy†. Its famous discussion of inflation-unemployment inter-relationships was subservient to this broader topic. The program it promoted influenced monetary policy in the ‘70s and early ‘80s with mixed results, but enough of it survived to be a clearly visible influence on today’s inflation-targeting regimes.
    Date: 2018
  12. By: Chattopadhyay, Siddhartha
    Abstract: Sufficiently persistent rise in nominal interest increases inflation rate in short-run. This short-run comovement of nominal interest rate and inflation rate is known as Neo-Fisherianism. This paper proposes a policy based on Neo-Fisherianism to escape Zero Lower Bound (ZLB) using a textbook forward looking New Keynesian model. I have shown that proposed policy with properly chosen inflation target and persistence can stimulate economy and escape ZLB by raising nominal interest rate. I have also shown that the proposed policy is robust to varying degrees of price stickiness.
    Keywords: New Keynesian Model, Neo-Fisherianism, Zero Lower Bound
    JEL: E31 E4 E43 E5 E52 E6 E63
    Date: 2019–02–20
  13. By: M. Ayhan Kose (World Bank, Development Prospects Group; Brookings Institution; CEPR, and CAMA); Hideaki Matsuoka (World Bank, Development Prospects Group); Ugo Panizza (Graduate Institute, Geneva; CEPR); Dana Vorisek (World Bank, Development Prospects Group)
    Abstract: This paper presents a comprehensive examination of the determination and evolution of inflation expectations, with a focus on emerging market and developing economies (EMDEs). The results suggest that long-term inflation expectations in EMDEs are not as well anchored as those in advanced economies, despite notable improvements over the past two decades. Indeed, in EMDEs, long-term inflation expectations are more sensitive to both domestic and global inflation shocks. However, EMDEs tend to be more successful in anchoring inflation expectations in the presence of an inflation targeting regime, high central bank transparency, strong trade integration, and a low level of public debt.
    Keywords: inflation, inflation expectations, monetary policy, emerging markets, developing economies.
    JEL: E31 E37 E40 E50
    Date: 2019–03
  14. By: Kubota, So
    Abstract: This study investigates which market structure gives rise to indeterminacy of stationary equilibria in a decentralized economy with non-degenerate distributions of money holdings. I develop a price-posting model with divisible money and then, examine two alternative markets: a pairwise random matching market and a many-to-many exchange. Importantly, the former market balances the number of matched buyers and sellers by definition. As a result, indeterminacy arises under the pairwise matching while a unique equilibrium exists in the many-to-many market. This balancing assumption also leads to the indeterminacy in a Walrasian market.
    Keywords: search theory, money, indeterminacy
    JEL: D31 D51 D83 E41
    Date: 2019–03
  15. By: Itamar Drechsler; Alexi Savov; Philipp Schnabl
    Abstract: Between 2003 and 2006, the Federal Reserve raised rates by 4.25%. Yet it was precisely during this period that the housing boom accelerated, fueled by rapid growth in mortgage lending. There is deep disagreement about how, or even if, monetary policy impacted the boom. Using heterogeneity in banks' exposures to the deposits channel of monetary policy, we show that Fed tightening induced a large reduction in banks' deposit funding, leading them to contract new on-balance-sheet lending for home purchases by 26%. However, an unprecedented expansion in privately-securitized loans, led by nonbanks, largely offset this contraction. Since privately-securitized loans are neither GSE-insured nor deposit-funded, they are run-prone, which made the mortgage market fragile. Consistent with our theory, the re-emergence of privately-securitized mortgages has closely tracked the recent increase in rates.
    JEL: E43 E52 G21 G23
    Date: 2019–03
  16. By: Adam Brzezinski; Yao Chen; Nuno Palma; Felix Ward
    Date: 2019
  17. By: Castellares, Renzo (Banco Central de Reserva del Perú); Toma, Hiroshi (Banco Central de Reserva del Perú)
    Abstract: We analyze whether a 2004 law requiring firms to express prices in the local currency in Peru, which had experienced a high degree of price dollarization, affected the exchange rate pass-through (ERPT). We hypothesize that the enactment of the law introduced menu costs for those firms that set their prices in dollars, prompting several of them to make a permanent switch from dollars to soles. Using disaggregated consumer price index (CPI) data, we find that after the enactment of the law, the ERPT was completely offset for non-durable goods with dollarized prices, and partially offset for durable goods with dollarized prices. These effects could be due to different shares of the imported content, market power and varying mark-ups.
    Keywords: exchange-rate pass through, price dollarization, local currency pricing
    JEL: D04 D49
    Date: 2019–01
  18. By: Paul Hubert (Observatoire français des conjonctures économiques)
    Abstract: When the central bank and private agents do not share the same information, private agents may not be able to appreciate whether monetary policy responds to changes in the macroeconomic outlook or to changes in policy preferences. In this context, this paper investigates whether the publication of the central bank macroeconomic information set modifies private agents’ interpretation of policy decisions. We find that the sign and magnitude of the effects of monetary policy depend on the publication of policymakers’ macroeconomic views. Contractionary monetary policy has negative effects on inflation expectations and stock prices only if associated with inflationary news
    Keywords: Monetary policy; Information processing; signal extraction; Market based inflation expectations; Central bank projections; Real time forecasts
    JEL: E52 E58
    Date: 2019–02
  19. By: Asier Aguilera-Bravo (Departamento de Economía-UPNA); Miguel Casares Polo (Departamento de Economía-UPNA)
    Abstract: This paper computes the steady-state optimal rate of inflation assuming two di erent sticky-price specifications, Calvo (1983) and Taylor (1980), in a model with monopolistic competition. The optimal rate of inflation in steady state is always positive. This result is robust to changes in the degree of price stickiness. In both cases of staggered prices, the optimal rate of inflation is approximately equal to the ratio between the rate of discount and the Dixit-Stiglitz elasticity.
    Keywords: Monopolistic Competition, Sticky Prices, Optimal Inflation
    JEL: E12 E31
    Date: 2019
  20. By: Kazuya Kamiya (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: It is known that stationary equilibria are indeterminate in some monetary models, especially in money search models with divisible money. However, most of the indeterminacy results are limited to the case that money holdings distributions have fi nite supports. In the case of infi nite supports, both determinacy and indeterminacy results are known. In this paper, using the Borsuk-Ulam theorem in Banach Space, I investigate what determines the differences.
    Keywords: Real Determinacy, Real Indeterminacy, Monetary Search Model, All-Pay Auction, Divisible Money, Infi nite Dimensional Space, Borsuk-Ulam Theorem
    JEL: C78 D51 D83 E40
    Date: 2019–03
  21. By: David Turner; Thomas Chalaux
    Abstract: Fan charts were pioneered by the Bank of England and Riksbank and provide a visuallyappealing means to convey the uncertainty surrounding a forecast. This paper describes amethod for parameterising fan charts around GDP growth forecasts by which the degree ofuncertainty is based on past forecast errors, but the skew is derived from a probit modelbasedassessment of the probability of a future downturn. The probit-based fan chartsclearly out-perform the Bank of England and Riksbank approaches when applied toforecasts made immediately preceding the Global Financial Crisis. These examples alsohighlight weaknesses with the Bank of England and Riksbank approaches.The Riksbank approach implicitly assumes that forecast errors are normallydistributed, but over a long track record this is unlikely to be the case becauseforecasters are generally poor at predicting downturns, which leads to bias and skewin the pattern of forecast errors. Thus, the Riksbank fan chart is neither an accuraterepresentation of past forecast errors, nor is it a reflection of the risk assessmentunderlying the forecast.The Bank of England approach relies heavily on the judgment of the members ofthe Monetary Policy Committee to assess risks. However, even when they havecorrectly foreseen the nature of future risks, the quantitative translation of theserisks into the fan chart skew has been too timid. Perhaps one reason for this is thatthe fan chart prediction intervals based on historical forecast errors already appearquite wide so that inflating them by adding skew may appear embarrassing (at leastex ante).The approach advocated in this paper addresses these weaknesses by recognising thatforecast errors are not symmetrical: firstly, this leads to more compressed predictionintervals in the upper part of the fan chart (representing the possibility of under-prediction);and secondly, using the large forecast errors from past downturns to calibrate downwardskew clearly supports a more bold approach when there is a risk of a downturn. A weaknessof the probit model-based approach is that it will not predict atypical downturns. Forexample, in the current conjuncture it would not pick up risks associated with a ‘no deal’Brexit or a global trade war. However, a downturn triggered by atypical events may bemore severe if risk factors describing a typical business-financial cycle are also high.
    Keywords: downturn, economic forecasts, fan charts, recession, risk, uncertainty
    JEL: E58 E17 E65 E66 E01
    Date: 2019–03–08
  22. By: Szilard Benk (International Monetary Fund); Max Gillman (Department of Economics, University of Missouri-St. Louis)
    Abstract: Real oil prices surged from 2009 through 2014, comparable to the 1970s oil shock period. Standard explanations based on monopoly markup fall short since ination remained low after 2009. This paper contributes strong evidence of Granger (1969) predictability of nominal factors to oil prices, using one adjustment to monetary aggregates. This adjustment is the subtraction from the monetary aggregates of the 2008-2009 Federal Reserve borrowing of reserves from other Central Banks (Swaps), made after US reserves turned negative. This adjustment is key in that Granger predictability from standard monetary aggregates is found only with the Swaps subtracted.
    Keywords: Oil Price Shocks, Granger Predictability, Monetary Base, M1 Divisia, Swaps, Ination.
    JEL: Q43 E51 E52
    Date: 2019–03
  23. By: Bullard, James; Singh, Aarti
    Abstract: We study nominal GDP targeting as optimal monetary policy in a model with a credit market friction following Azariadis, Bullard, Singh and Suda (2018), henceforth ABSS. As in ABSS, the macroeconomy we study has considerable income inequality which gives rise to a large private sector credit market. Households participating in this market use non-state contingent nominal contracts (NSCNC). We extend the ABSS framework to allow for endogenous and heterogeneous household labor supply among credit market participant households. We show that nominal GDP targeting continues to characterize optimal monetary policy in this setting. Optimal monetary policy repairs the distortion caused by the credit market friction and so leaves heterogeneous households supplying their desired amount of labor, a type of “divine coincidence” result. We also analyze the incomplete markets equilibrium that exists when the monetary policymaker pursues a suboptimal policy, and show how an extension to more general preferences can limit the ability of the policymaker to provide full insurance to households in this setting.
    Keywords: Monetary policy transmission; input-output; VAR; intermediate goods.
    Date: 2018–11
  24. By: Marshall Reinsdorf (International Monetary Fund); Paul Schreyer (OECD)
    Abstract: The effect on the household consumption price index from possible sources of error in capturing digital products depends on the weight of the affected products. To calculate upper bounds for this effect, we apply weights based on the average structure of household consumption in OECD countries to a maximum plausible overstatement of price change for each affected or potentially affected product. The products account for about 35% of household expenditure in 2005, declining to 32% in 2015. The upper bound simulation effect on the growth rate of the consumption deflator is somewhat less than –0.6 percentage points in 2015 – large enough to improve the picture of GDP and productivity growth in advanced economies. However, this would not overturn the conclusion that productivity growth has slowed substantially compared over the past decades.
    Keywords: cost of living index, digital replacements, digitalised economy, GDP growth, Inflation, productivity
    JEL: C43 D11 D60 E01 E31 O47
    Date: 2019–02–27
  25. By: António Rua
    Abstract: Liquidity management is a key mission of a central bank. In particular, the adequate provision of banknotes requires the understanding of what drives currency demand in a continuously changing environment. The challenge is even bigger in the case of the European monetary union where the euro continues to develop into a well-established currency outside borders. The focus is on modelling euro banknotes demand namely by considering its denominational breakdown. Such an analysis allows to unveil the heterogeneous role played by the several drivers while providing a more in depth modelling of currency demand. The econometric approach pursued allows to take on board the interconnections across denominations both in the long- and short-run dynamics.
    JEL: C32 E41 E50
    Date: 2019
  26. By: Shirai, Sayuri (Asian Development Bank Institute)
    Abstract: Money is a financial instrument that fulfills the basic functions as a medium of exchange, unit of account, store of value, and standard of deferred payment. The function as a medium of exchange allows efficient transactions of goods and services among people without forming an inconvenient barter system. The unit of account enables the value of all goods and services to be expressed in common criteria, thereby smoothening the comparison of goods and services and facilitating their transactions. The store of value refers to any asset whose value can also be used in the future because of the ability to maintain its value, thereby enabling people to save to finance their spending at a later date. In addition to these three basic functions, the function as a standard of deferred payment is regarded as an additional important function of money since it enables it to express the value of a debt so that people can purchase goods and services today by paying back debt in the future. To meet these four functions, money must be durable, portable, divisible, and difficult to counterfeit.
    Keywords: money; central bank digital currency; cash; digital coins; bank deposits
    JEL: E42 E44 E51
    Date: 2019–02–13
  27. By: Paul Simshauser (Griffith Business School, Griffith University Energy Policy Research Group, University of Cambridge)
    Keywords: Resource Adequacy, Climate Change Policy, Electricity Prices
    JEL: D61 L94 L11 Q40
    Date: 2018–06
  28. By: Andreas Hanl (University of Kassel); Jochen Michaelis (University of Kassel)
    Abstract: Digitalization increasingly replaces the demand for cash and leads to a privatization of payment systems. A recently discussed central bank reaction is central bank digital currency. This article discusses the concept, design options, the implementation into the monetary policy framework, and the macroeconomic consequences of a central bank digital currency.
    Keywords: CBDC, Digitales Zentralbankgeld, Geldpolitik
    JEL: E42 E44 E52 E58
    Date: 2019
  29. By: NTITA NTITA, Jean; KAZADI NTITA, François; NTANGA NTITA, Jean de Dieu
    Abstract: This paper examines the determinants of inflation in six countries of Central African Economic and Monetary Community (CAEMC). To achieve this objective, we used a panel model estimated by fixed effects over the period from 1996 to 2016. The econometric analysis shows that the money supply has a positive and very significant effect on inflation while political stability has a negative and very significant effect on inflation in this area. Management of the money supply and the maintenance of political stability are essential for the control of inflation in this area.
    Keywords: Inflation, Politique monétaire, Panel, effets fixes, CEMAC.
    JEL: C23 E31 O55
    Date: 2017–04

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