№ 10/2018

Fìnansi Ukr. 2018 (10): 97–110

MONETARY POLICY

SELIVERSTOV Valerii ¹

¹Zaporozhye National Technical University
OrcID ID : https://orcid.org/0000-0003-2601-8834

Analysis of the effect of monetary instruments for private consumption expenditure, as a regulation factor of the price level

Now considerable attention is attracted to negative values of interest rates on overnight loans, which are formed by the leadership of the ECB and the Bank of Japan,
in order to influence deflationary processes. In the absence of the desired effects, there are doubts, regarding the continuation of measures aimed at further reducing and maintaining the negative values of the relevant overnight rates. The purpose of this study is to explain the possible causes of insufficiently effective control over the rate of inflation through the use of traditional and non-traditional monetary instruments. This study analyzes the specifics of the monetary instruments impact on the level of Private Consumption Expenditure (PCE), in particular due to changes in the level of short-term interest rates. For this the regression and auto regression models, which use the following time series: personal consumption, overnight rates, and the amount of cash in circulation, were created. The findings of the study indicate the need to revise the current attitude to the interest rate as an instrument of indirect influence on the general level of prices, and to determine more effective levers of influence on deflationary processes. In addition, they cast doubt on the correctness of the current attitude towards the nature of interest rates – in the conditions of the US, EU and UK economies interest rate cuts do not lead to the growth, but rather to a decrease in the PCE. The caution against the attitude of the NBU leadership towards the traditional recipe for implementing its own monetary policy due to the probability of insufficiently effective influence of changes in the level of interest rates to achieve the target inflation indicators is expressed. It is also proposed to focus on the non-monetary leverage to regulate the growth rates of the general price level.

Keywords:personal consumption expenditure, overnight rate, cash in circulation, regression and auto-regression models

JEL: E52, E58

SELIVERSTOV V. . Analysis of the effect of monetary instruments for private consumption expenditure, as a regulation factor of the price level / V. . SELIVERSTOV // Фінанси України. - 2018. - № 10. - C. 97-110.

Article original in Ukrainian (pp. 97 - 110)

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