№ 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)

Download

Downloads :181

1. The European Central Bank. (2018, October). Statistical Data Warehouse. Retrieved from sdw.ecb.europa.eu/reports.do?node=1000002994
2. The Bank of Japan. (2018, October). BOJ’s Main Time-series Statistics. Retrieved from www.stat-search.boj.or.jp/ssi/mtshtml/m_en.html.
3. Keynes J. M. The General Theory of Employment, Money, and Interest. Retrieved from socioline.ru/files/5/316/keyns.pdf [in Russian].
4. Federal Reserve Bank of San Francisco. (n. d.). U.S. Monetary Policy. Retrieved from www.frbsf.org/us-monetary-policy-introduction/.
5. The European Central Bank. (n. d.). Transmission mechanism of monetary policy. Retrieved from www.ecb.europa.eu/mopo/intro/transmission/html/index.en.html.
6. The Bank of Japan. (n. d.). Outline of Monetary Policy. Retrieved from www.boj.or.jp/en/mopo/outline/index.htm/.
7. The Bank of England. (n. d.). How Monetary Policy Works. Retrieved from www.bankofengland.co.uk/monetarypolicy/Pages/how.aspx.
8. Danylyshyn, В. (2018). Main directions of monetary policy of Ukraine. Finance of Ukraine, 2, 9–25 [in Ukrainian].
9. Mishhenko, V., Lon, I. (2017). The role of monetary regulation in stimulating economic growth. Finance of Ukraine, 4, 75–93 [in Ukrainian].
10. Mishhenko, V. (2015). The role and functions of monetary transmission mechanism in ensuring price stability. Finance of Ukraine, 1, 29–46 [in Ukrainian].
11. English, W. B., López-Salido, J. D., Tetlow, R. J. (2013, October 18). The Federal Reserve’s Framework for Monetary Policy Recent Changes and New Questions. Retrieved from www.federalreserve.gov/pubs/feds/2013/201376/index.html.
12. D’Amico, S., English, W., Lopez-Salido, D., Nelson, E. S. (2012, October 31). The Federal Reserve’s Large-Scale Asset Purchase Programs: Rationale and Effects. Retrieved from www.federalreserve.gov/pubs/feds/2012/201285/index.html.
13. Carpenter, S., Demiralp, S., Ihrig, J., Klee, E. (2013, April). Analyzing Federal Reserve Asset Purchases: From whom does the Fed buy? Retrieved from www.federalreserve.gov/pubs/feds/2013/201332/201332pap.pdf.
14. Kim, J., Pruitt, S. (2013, August). Estimating Monetary Policy Rules When Nominal Interest Rates Are Stuck at Zero. CAMA Working Paper, 53/2013. Retrieved from cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2013-08/53_2013_kim_pruitt.pdf.
15. Claeys, G. (2014, July 8). The (not so) Unconventional Monetary Policy of the European Central Bank since 2008. Retrieved from www.bruegel.org/publications/publication-detail/publication/837-the-not-so-unconventional-monetary-policy-of-the-european-central-bank-since-2008/.
16. Szczerbowicz, U. (2012, December). The ECB unconventional monetary policies: have they lowered market borrowing costs for banks and governments? CEPII, 2012-36. Retrieved from www.cepii.fr/PDF_PUB/wp/2012/wp2012-36.pdf.
17. Pattipeilohya, C., Van den Enda, J.W., Tabbaea, M., Frosta, J., de Haan, J. (2013, May). Unconventional monetary policy of the ECB during the financial crisis: An assessment and new evidence. DNB Working Paper, 381. Retrieved from www.dnb.nl/binaries/Working%20Paper%20381_tcm46-291731.pdf.
18. Federal Reserve Bank of San Francisco. (2018, October). FRED Economic Data. Retrieved from research.stlouisfed.org/fred2/categories.
19. Office for National Statistics. (2018, October). GDP first quarterly estimate time series. Retrieved from www.ons.gov.uk/ons/rel/naa2/second-estimate-of-gdp/q4-2014/tsd-second-estimate-of-gdp--q4-2014.html.
20. The Bank of England. (2018, October). Statistical Interactive Database. Retrieved from www.bankofengland.co.uk/boeapps/iadb/BankStats.asp?Travel=NIxAZx.
21. National Bank of Ukraine. (n. d.). Monetary policy. Retrieved from bank.gov.ua/control/uk/publish/article?art_id=875457&cat_id=71412/ [in Ukrainian].