|
on Transition Economics |
| By: | Tetiana Yukhymenko (National Bank of Ukraine); Oleh Sorochan (National Bank of Ukraine) |
| Abstract: | This study explores the impact of central bank communications on a range of macrofinancial indicators. Specifically, we examine whether information posted on the National Bank of Ukraine (NBU) website influences foreign exchange (FX) markets and the inflation expectations of experts. Our main results suggest that the NBU's statements and press releases on monetary policy issues do indeed matter. For instance, we find that exchange rate movements and volatility are negatively correlated with the volumes of publications of the NBU on its official website. However, this effect is noticeably larger for volatility than for exchange rate changes. The impact of communication on FX developments is strongest a week after a news release, and it persists further. Furthermore, the inflation expectations of financial experts, though indifferent to NBU updates overall, turn out to be sensitive to monetary policy announcements. The latter reduces the level of expectations and interest rate movement. |
| Keywords: | central bank communications, monetary policy, FX market, text analysis |
| JEL: | E58 E71 C55 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:ukb:wpaper:01/2024&r=tra |
| By: | Andrea Gazzani (Bank of Italy); Fabrizio Venditti (Bank of Italy); Giovanni Veronese (Bank of Italy) |
| Abstract: | Oil prices contain information on global shocks of key relevance for monetary policy decisions. We propose a novel approach to identify these shocks at the daily frequency in a Structural Vector Autoregression (SVAR). Our method is devised to be used in real time to interpret developments in the oil market and their implications for the macroeconomy, circumventing the problem of publication lags that plagues monthly data used in workhorse SVAR models. This method proves particularly valuable for monetary policymakers at times when macroeconomic conditions evolve rapidly, like during the COVID-19 pandemic or the invasion of Ukraine by Russia. |
| Keywords: | oil prices, VAR, real time, monetary policy |
| JEL: | Q43 C32 E32 C53 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1448_24&r=tra |
| By: | David K. Levine; Lee E. Ohanian |
| Abstract: | Much has been written about deterrence, the process of committing to punish an adversary to prevent an attack. But in sufficiently rich environments where attacks evolve over time, formulating a strategy involves not only deterrence but also appeasement, the less costly process of not responding to an attack. This paper develops a model that integrates these two processes to analyze the equilibrium time paths of attacks, punishment, and appeasement. We study an environment in which a small attack is launched and can be followed by a larger attack. There are pooling and separating equilibria. The pooling equilibrium turns the common intuition that appeasement is a sign of weakness, inviting subsequent attacks, on its head, because appeasement is a sign of strength in the pooling case. In contrast, the separating equilibrium captures the common intuition that appeasement is a sign of weakness, but only because deterrence in this equilibrium fails. We interpret several episodes of aggression, appeasement, and deterrence: Neville Chamberlain's responses to Hitler, Putin's invasion of Ukraine, Israel's response to Hamas, Turkey's invasion of Cyprus, and Serbia's attacks in Kosovo. |
| JEL: | D0 D82 F0 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32280&r=tra |
| By: | Andriy Tsapin (National Bank of Ukraine; National University of Ostroh Academy); Oleksandr Faryna (National Bank of Ukraine; National University of Kyiv-Mohyla Academy) |
| Abstract: | Using survey data from the USAID Financial Sector Transformation Project, this paper examines whether or not financial literacy influences households' expectations about future prices and whether or not it anchors inflation expectations to the central bank's target. We find that higher financial literacy lowers average uncertainty about one-year inflation, but increases three-year inflation expectations. The results from quantile regressions confirm the asymmetric effects of financial literacy and its components on inflation. Inverse effects of financial literacy on expected inflation are at work for the upper end of the distribution (unanchored expectations), while positive effects are seen in the lower end of the distribution (anchored expectations). Our findings also suggest that financial literacy significantly improves inflation perceptions and the accuracy of individuals' predictions about inflation. The conclusions from this research are beneficial and have strong policy implications for the central bank's monetary policy. |
| Keywords: | c inflation expectations, inflation perceptions, financial literacy, monetary policy |
| JEL: | C81 D80 D82 E31 E52 E58 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:ukb:wpaper:02/2024&r=tra |
| By: | Miguel Ángel Borrella-Mas (Universidad de Navarra); Jaime Millán-Quijano (Universidad de Navarra & CEMR); Anastasia Terskaya (Universitat de Barcelona & IEB) |
| Abstract: | We implemented a randomized control trial in Georgia to study how labels and food vouchers affect household expenditure among low-income recipients of unconditional cash transfers. Households were randomly assigned to receive only an unconditional cash transfer, a label indicating an amount intended for children’s expenses in addition to the transfer, or a portion of the transfer as a food voucher usable exclusively at designated stores. We find that labelling increases the share of expenditure on children. Meanwhile, food vouchers reduce total consumption, this being likely due to the increased cost associated with shopping at voucher-accepting shops. |
| Keywords: | Cash transfers, Labeling effect, Food vouchers, Randomized control trial |
| JEL: | D04 I24 I38 O12 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:doc2023-09&r=tra |
| By: | Ceballos, Francisco; de Brauw, Alan; Soneja, Payal |
| Abstract: | During 2023, researchers from Work Package 2 (WP2) of the Sustainable Healthy Diets through Food Systems Transformation (SHiFT) initiative conducted three linked surveys to learn more about micro, small, and medium enterprises (MSMEs) that currently supply foods within urban, peri-urban, and rural locations in Viet Nam and devise ways to foster their supply of sustainable nutritious foods (SNFs). The surveys had three linked goals—to better characterize the business environment in which MSMEs operate; to understand any constraints they face in selling more SNFs; and to help inform interventions with scaling potential that could increase the availability of SNFs for consumers. The first survey consisted of a listing exercise (or the “short audit†), the second survey was a longer survey targeting outlets from the listing that had a higher chance of being MSMEs and could potentially modify their food offerings, and the third survey was targeted at suppliers of those MSMEs, with the objective of identifying any potential constraints at the supplier level for expanding the offering of SNFs. The sample for the third survey was derived from the MSME sample. Ceballos et al. (2023) describe in detail the data collection efforts conducted, including sampling strategies, overall sample composition, and implementation of the three surveys. This document presents selected results from these three surveys, with a focus on the second MSME survey. The next section describes the typology of outlets enumerated in the different surveys, and the final outlet groupings used in the analyses in this note. The MSME survey results section discusses the main findings from the MSME survey in terms of general ownership characteristics, employment patterns, business skills and access to finance, food offerings, and nutrition knowledge and interest in offering more SNFs to clients, distinguishing across outlet groups and vendor clusters. The Supplier survey results section presents the main findings from the supplier survey, in terms of food offerings, the composition of their client portfolio, their level of formalization, business skills, and credit use, and their interest in selling more nutritious foods. The final section summarizes the findings and concludes. |
| Keywords: | production; microenterprises; food supply; small and medium enterprises; food supply chains; Vietnam; South-eastern Asia; Asia |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:cgiarp:140156&r=tra |
| By: | Hinterlang, Natascha; Jäger, Marius; Stähler, Nikolai; Strobel, Johannes |
| Abstract: | The dependency on imported essential production inputs poses a threat of abrupt price hikes and shortages, potentially triggered by political events. The energy crisis resulting from the Russian war of aggression is an example. This paper investigates whether governments should bolster production via transfers or cost subsidies in the event of a crisis, utilizing a dynamic multi-sector economic model that is calibrated to Germany and incorporates endogenous firm entry and exit. Our findings suggest that subsidizing production costs is more beneficial for economic activity and welfare, provided the energy demand due to the subsidy does not significantly influence the price of the essential production input. If it does, this approach could become exceedingly expensive. In such scenarios, it is economically more efficient to provide lump-sum transfers to firms. The effectiveness of these policies ultimately hinges on their impact on the price of the imported input. |
| Keywords: | Dynamic General Equilibrium Model, Input-Output Matrix, Energy crisis, Gas Price Brake |
| JEL: | E32 E50 E62 H32 Q58 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdps:287760&r=tra |
| By: | Shalva Mkhatrishvili (Head of Macroeconomics and Statistics Department, National Bank of Georgia); Douglas Laxton (NOVA School of Business and Economics, Saddle Point Research, The Better Policy Project); Tamta Sopromadze (Head of Monetary Policy Division, National Bank of Georgia); Mariam Tchanturia (Macroeconomic Research Division, National Bank of Georgia); Ana Nizharadze (Macroeconomic Research Division, National Bank of Georgia); Sergo Gadelia (Macroeconomic Research Division, National Bank of Georgia); Giorgi Gigineishvili (Macroeconomic Research Division, National Bank of Georgia); Jared Laxton (Economist at Advanced Macro Policy Modelling (AMPM)) |
| Abstract: | We advocate for a novel approach to decomposing the Consumer Price Index, critiquing the traditional core inflation distinction (which omits volatile items like food and energy) for lacking a solid economic basis. Our proposed method, inspired by practices in economies like the United States, New Zealand and Armenia, categorizes prices into "flexible, " which adjust quickly and are influenced by external factors, and "sticky" non-tradables, which adjust more slowly, offering a clearer view of medium-term inflation expectations. This approach underscores the importance of economic analysis over simplistic statistical methods that exclude volatile CPI components. It emphasizes the need for economists to understand the dynamics driving both sticky and flexible price inflation, with the latter often signifying initial signs of excess demand pressures. Recognizing the impact of dollarization, where exchange rate depreciations quickly affect nontraded sticky prices, becomes crucial. This understanding is vital for formulating monetary policies that prevent long-term inflation expectations from escalating, highlighting the significance of studying the interplay between exchange rate movements and domestic price dynamics in dollarized economies. |
| Keywords: | Non-tradable sticky prices; Monetary policy credibility; Core inflation |
| JEL: | E10 E31 E52 E58 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:aez:wpaper:2024-01&r=tra |
| By: | Dorosh, Paul A.; Diao, Xinshen; Thurlow, James; Koirala, Pankaj; Timsina, Krishna; Krupnik, Timothy J. |
| Abstract: | Over the past decades, climate change has brought about numerous detrimental consequences for agricultural production in many countries, posing a substantial challenge to the economic well being of farmers while affecting national and international economies. Meteorological data specifically indicates that extreme weather events are occurring with unprecedented frequencies, intensities, and durations. This includes events associated with variations in the El Niño – Southern Oscillation of ocean currents, such as unusually dry weather in June through August in Nepal and other parts of South Asia. For example, during the El Niño year of 1992, a particularly severe drought occurred in Nepal, contributing in part to a 17.7 percent fall in rice production relative to the prior trend. Current indications are that another El Niño – related drought may already be underway in 2023 and into 2024. With the extreme weather events, global economies have experienced a number of recent shocks – for example those associated with the COVID-19 pandemic and conflicts in countries such as the Ukraine and Russia that are important exporters of agricultural inputs and goods. As such, this research note explores the implications of a range of agricultural productivity shocks including but not limited to those resulting from a possible El Niño-related drought in 2023 and extending into early 2024 (coinciding with the monsoon and post-monsoon seasons). |
| Keywords: | climate change; agricultural production; economic aspects; extreme weather events; el niño; shock; drought; Nepal; Asia |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:cgiarp:136173&r=tra |