It is generally believed that central banks ideally should have a single overwhelming objective of price stability. In practice, however, central banks are responsible for a number of objectives besides price stability, such as currency stability, financial stability, growth in employment and income. Of late, however, considerations of financial stability have assumed increasing importance in monetary policy. The most serious economic downturns in the recent years appear to be generally associated with financial instability.
Monetary policy is known to have both short and long-term effects. While it generally affects the real sector with long and variable lags, monetary policy actions on financial markets, on the other hand, usually have important short-run implications. Typical lags after which monetary policy decisions begin to affect the real sector could vary across countries. It is, therefore, essential to understand the transmission mechanism of monetary policy actions on financial markets, prices and output.
The four monetary transmission channels, which are of concern to policy makers are: the quantum channel, especially relating to money supply and credit; the interest rate channel; the exchange rate channel, and the asset prices channel. Monetary policy impulses under the quantum channel affect the real output and price level directly through changes in either reserve money, money stock or credit aggregates. The remaining channels are essentially indirect as the policy impulses affect real activities through changes in either interest rates or the exchange rate or asset prices. Since none of the channels of monetary transmission operate in isolation, considerable feedbacks and interactions, need to be carefully analysed for a proper understanding of the transmission mechanism.
It is important to distinguish strategic and tactical considerations in the conduct of monetary policy. While monetary strategy aims at achieving final objectives, tactical considerations reflect the short run operational procedures. Both strategies and tactics for monetary management are intricately linked to the overall monetary policy framework of a central bank. Depending upon the domestic and international macroeconomic developments, the long run strategic objective could change, leading to a change in the nature and the extent of short run liquidity management. The strategic aspects of monetary management crucially depend on the choice of a nominal anchor by the central bank. In this regard, four broad classes of monetary strategies could be distinguished. Two of these, viz., monetary targeting and exchange rate targeting strategies, use a monetary aggregate and the exchange rate respectively as an explicit intermediate target.
The demonstration in this research is simple and the resources are not rich enough. The query to the relevance between the monetary policy and the house bubble still has not been answered. The level of effect the monetary policy made to the financial crisis is still has not been assessed.
Strengths – In terms of its strengths, WWP is a fast-growing nonprofit that is able to reach its financial objectives to fund its many programs. This is evidenced by the fact that the WWP reported that it has a “total revenue of $342 million, which is more than the revenue WWP generated 5 years ago at $74 million” (Clolery & Hrywna, 2016, para.13). WWP’S membership numbers continue to increase, and as of July 2016 WWP has 91,218 alumni and 19,766 family members (Who We Serve, n.d.). The numbers have increased steadily over the past few years and are projected to increase in the years to come. Currently, the WWP has many corporate sponsors, which include the NFL, Amazon, and Bank of America. (Current Corporate Sponsors, n.d.). This shows that the WWP is an organization that helps veterans and is supported by reputable and widely known companies, which demonstrates that the WWP is good at fundraising.
Women, Infants and Children (WIC) was established “ To safeguard the health of low-income women, infants, and children up to age 5 who are at nutrition risk by providing nutritious foods to supplement diets, information on healthy eating, and referrals to health care.” In this paper one will weigh the pros and cons, review the information given and come to an overall opinion of the program.
In this paper, I will explore the definition of monetary policy, the objectives of the monetary and the monetary policy bases.
Three monetary policy tools that are used in the economic world are open market operations, discount rate, and reserve requirements. When it comes to the monetary policy tools, they are all beneficial, nonetheless the open market operation is the primary and most important tool used by the Federal Reserve System and can be easily executed. Open market operations is the buying and selling of U.S Government securities on the open market for reasons of the growth of credit and money aggregates and the swaying short-term interest rates. It affects the banks reserve through buying or selling of bonds, which ca...
The seventh chapter asks, ‘Why Do Central Bankers Have Power over the Economy?’. In this chapter, the authors evaluate the power of central banks during normal and tough times and question whether central banks ‘have the power to control something as huge as the macroeonomy’ (p.74).
Before we begin our investigation, it is imperative that we understand the historical role of the central bank in the United States. Examining the traditional motives of this institution over time will help the reader observe a direct correlation between it and its ability to manipulate an economy. To start, I will examine one of its central policies...
The Great Depression was a period in America's history, from 1929-1939, when America’s economy went into a deep recession. The stock market crashed, banks closed, jobs closed down and 1 in 4 Americans was unemployed. In 1932, the people elected Franklin Delano Roosevelt to be President of the United States. He made a plan to try and stop the Great Depression and that plan is called the New Deal. In the New Deal, there were a lot of plans and agencies that would relieve the American people, help them recover, and then make reforms so the Great Depression won't happen again. Under recover, there was an agency called the Works Progress Administration (WPA). The construction of the LaGuardia airport is a project by the WPA.
In the study of macroeconomics there are several sub factors that affect the economy either favorably or adversely. One dynamic of macroeconomics is monetary policy. Monetary policy consists of deliberate changes in the money supply to influence interest rates and thus the level of spending in the economy. “The goal of a monetary policy is to achieve and maintain price level stability, full employment and economic growth.” (McConnell & Brue, 2004).
Monetary policy is the mechanism of a country’s monetary authority (usually the central bank) taking up measures to regulate the supply of money and the rates of interest. It involves controlling money in the economy to promote economic growth and stability by creating relatively stable prices and low unemployment. A monetary policy mainly deals with the supply of money, availability of money, cost of money and the rate of interest to attain a set of objectives aiming towards growth and stability of the economy. Here are some of the monetary policy tools:
The term Monetary policy refers to the method through which a country’s monetary authority, such as the Federal Reserve or the Bank of England control money supply for the aim of promoting economic stability and growth and is primarily achieved by the targeting of various interest rates. Monetary policy may be either contractionary or expansionary whereby a contractionary policy reduces the money supply, reduces the rate at which money is supplied or sets about an increase in interest rates. Expansionary policies on the other hand increase the supply of money or lower the interest rates. Interest rates may also be referred to as tight if their aim is to reduce inflation; neutral, if their aim is neither inflation reduction nor growth stimulation; or, accommodative, if aimed at stimulating growth. Monetary policies have a great impact on the economic stability of a country and if not well formulated, may lead to economic calamities (Reinhart & Rogoff, 2013). The current monetary policy of the United States Federal Reserve while being accommodative and expansionary so as to stimulate growth after the 2008 recession, will lead to an economic pitfall if maintained in its current state. This paper will examine this current policy, its strengths and weaknesses as well as recommendations that will ensure economic stability.
Impact of monetary policy on the economy a regional Fed perspective on inflation, unemployment, and QE3 : Hearing before the Subcommittee on Domestic Monetary Policy and Technology of the Committee on Financial Services, U.S. House of Representatives, One. (2011). Washington: U.S. G.P.O.
Money Supply plays an important role in macroeconomic analysis, especially in selecting an appropriate monetary and fiscal policy. Considerably, I am yet to come across theoretical work that has been done on this topic (analysis money supply and its impact on other variable i.e. inflation, interest rate, real GDP and nominal GDP). However some other topics similar to this one have been done by AL-SHARKAS, Adel, where he uses the same technique and models on the topic ‘out put response to shocks to interest rate, inflation and stock returns. His work investigates the relationship between the Jordanian output and other macroeconomics variables such as inflation, interest rate and stock returns. His paper employs the VAR approach method of Lee (1992) to analyze the relation and dynamic interaction among variables. The IRF and the FEVD from the VAR model are computed in order to investigate interrelationships within the system. The empirical results indicate that Interest rate and inflation are weakly negatively correlated and real stock returns and inflation is very weakly positively correlated for all leads and lags are negatively associated. Furthermore, the response of output (IPG) to shocks in stock returns (R1) is strongly positive up to the first 6 periods and after which the effect almost dies. This indicates that the relationship between stocks returns (R1) and real activity (IPG) is positive and inflation has a negative impact on IPG (Adel A. Al-Sharkas 2004).
Wal-Mart Stores, Inc. is a renowned retail goods superstore that sits atop the Fortune list at number one. It would be very difficult to find an individual who is unaware of Walmart’s position as the largest brick-and-mortar retail chain in the world. The company has thrived over the past few years and is continuing to grow by effectively managing its store operations and distribution strategies. One of the major contributors to the business consistently meeting market expectations is directly attributable to their management approach. Walmart has revolutionized the way retail companies manage their supply chains in more ways than one. But, perhaps the most revolutionary was the practice of unprecedented coordination with suppliers (Chekwa,
Ferguson et al. International financial stability. Geneva: International Center for Monetary and Banking Studies, 2007. Print.