Monetary Policy – Monetary Policy after the Global Crisis https://monetarypolicy2018.weaconferences.net 19th February to 20th April, 2018 Mon, 09 Jun 2025 12:37:55 +0000 en-GB hourly 1 Banking regulation and post crisis approach to bankruptcies: An analysis through shadow banking, moral hazard and too big to fail https://monetarypolicy2018.weaconferences.net/papers/banking-regulation-and-post-crisis-approach-to-bankruptcies-an-analysis-through-shadow-banking-moral-hazard-and-too-big-to-fail/ Fri, 09 Feb 2018 16:36:22 +0000 http://monetarypolicy2018.weaconferences.net/?post_type=wea_paper&p=186 The work starts analyzing the pre and post 2007-2009 crisis banking regulation to later on deepen including mathematical finance and economic policy concepts and models into the application of the regulation among the US, Eurozone and Asia Pacific markets. The aim of the work is to analyze the application of the banking regulation in a bankruptcy or bailout scenario, through an empirical study of the authorities and consequently market agents. The model, based on the CAPM assumptions, is tested via the VaR implications and via the Black and Scholes application. The output of the analysis is to empirically demonstrate how the Moral Hazard concept and the speculative behaviours affect financial markets through the 2007-2009 crisis effects study, to then conclude with the inadequacy of the Too Big To Fail concept within the current financial system: if it is Too Big To Fail, then it is also Too Big To Exist.

]]> The fiscal theory of price level: A theory of monetary-fiscal policy coordination https://monetarypolicy2018.weaconferences.net/papers/the-fiscal-theory-of-price-level-a-theory-of-monetary-fiscal-policy-coordination/ Fri, 09 Feb 2018 16:22:33 +0000 http://monetarypolicy2018.weaconferences.net/?post_type=wea_paper&p=180 Annual of the Faculty of Economics - Skopje, 51(1), 527-537. ]]> This article analyzes the basic tenets of the Fiscal Theory of Price Level (FTPL) as an unorthodox current in modern macroeconomic thinking. First, the differences between the two basic models of the conventional monetarist view and the FTPL – i.e. the quantity-theory-of-money equation and the intertemporal-government-budget equation – are explored. In this context, the key difference is, in fact, related to the assumption underlying the behavior of fiscal authorities: the conventional view rests on Ricardian type, while FTPL allows a possibility for a non- Ricardian type of fiscal behavior. Second, it is shown how the logic of the FTPL can be applied to interpret the historical episodes of hyperinflation and deflation when the conventional monetarist view cannot offer a satisfactory explanation based on simple money supply changes vs price level changes relationship. In this context, the FTPL stresses the importance of taking into consideration the fiscal policy actions in order to understand the inflation dynamics in the episodes like the German hyperinflation of 1922-1923 or the co-existence of low inflation/deflation and monetary expansion through the quantitative easing programs in the period post-financial crisis of 2007-2008. Finally, it is pointed out that the FTPL is not a substitute, but is rather a complement to the conventional theory of monetary policy and that the main contribution has been to consider the price level determination as a joint result of the interaction between monetary and fiscal policies.

This paper has already been published as:

Filipovski, V. (2016). The fiscal theory of price level: A theory of monetary and fiscal policy coordination. Annual of the Faculty of Economics – Skopje, 51(1), 527-537.

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]]> Money demand, Divisia aggregate and share price volatility in the UK https://monetarypolicy2018.weaconferences.net/papers/money-demand-divisia-aggregate-and-share-price-volatility-in-the-uk/ https://monetarypolicy2018.weaconferences.net/papers/money-demand-divisia-aggregate-and-share-price-volatility-in-the-uk/#comments Fri, 09 Feb 2018 15:36:38 +0000 http://monetarypolicy2018.weaconferences.net/?post_type=wea_paper&p=167 We investigate (i) the performance of the weighted monetary aggregate, Divisia, relative to its official Simple Sum counterpart in a money demand framework, and (ii) the impact of share prices and their volatility on these aggregates. We find that the Divisia aggregate shows more stability with monetary policy targets, such as output, than its counterpart, particularly during the financial crisis and beyond. We also find that the influence of share prices and their volatility on monetary aggregates have increased in the recent decades. We also uncover that as share prices increase, investors tend to increase their holdings of more savings oriented assets but they also switch from low interest yielding highly liquid assets into equities.

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