report por1A Fecha de entrega: 20-ene-2024 07:55a.m. (UTC-0500) Identificador de la entrega: 2274483137 Nombre del archivo: report final-20-1.docx (469.01) Total de palabras: 3140 Total de caracteres: 16897Abstract, ‘Monetary policy is neither as simple as the New Keynesian Taylor Rule nor as frictionless as the Keynesianism requirement for liquidity when it comes to combining monetary activiti Inflation targeting can achieve spectacular outcomes if the concerns of the production gap and feedback from monetary aggregates are disregarded. When it comes to inflation, the basic Taylor principle is not enough. Inflation and interest rates are significantly related, according, to the findings. ‘The money supply was found to be negligible and the findings from applying Taylors rule reveal that the State Bank of Pakistan favored a eyelical rather than a rigid policy, and there is substantial evidence of the production gap in Pakistan, Predictions based on the active interest rate rule do not seem to have been made. It is also not trivial to manage inflation using monetary aggregates and output gaps in combination. Although inflation settles into a stable state over the Jong term, interest rate adjustments are necessary for effective monetary policy. Introduction: Short-term interest rates have been criticized for their simplicity and lack of real-time forecasting in explaining production gap and inflation variations. Rule-based approaches failed to explain macroeconomic activity during the COVID-19 epidemic and global financial crisis. In order to absorb surplus liquidity post-COVID-19, central banks adjusted short-term interest rates Forward guidance, quantitative easing, and reserve requirement modifications were utilized to ‘optimize inflation, Conventional rules-based monetary policy can reduce the production gap but not a worsening economy or financial crises. New Keynesians consider money supply adjustments are_made outside of monetary policy. A program that preserves price stability without losing production gives central banks legitimacy. ‘The SBP controls inflation, which has averaged 20% since the 1970s. The SBP announces its monetary policy stance by changing the target policy rate to meet the government's annual and ‘medium-term inf rate objective. The 2015 SBP target policy rate is an interest rate corridor used to manage inflation, The weighted average of reverse repo and SBP repo facilities affects aggregate demand and savings. The report discusses the SBP's inflation control and price ability efforts. The production gap makes money supply information crucial to regulating inflation, The report provides empirical data on the efficacy of monetary policy from 1970 to2022, concentrating on how broad money supply and market interest rate affect objective inflation. The report also analyzes Pakistan's complicated monetary policy process, emphasizing capital market crosschecking and the Taylor rule. Literature Review: Central and easter European transition economies (including Poland, Hungary, the Slovak Republic, Romania, Slovenia, and the Czech Republic) were the focus of Tieman's (2004) research on interest rate pass-through. Romania was the primary subject of the report. A total of nine years (1995-2004) of monthly data from all countries were used to use ECM in the research. Pass through in Romania is quite similar to pass through in the conversion economies ‘of castern and central Europe, according to the research. In their 2008 study, Liy et al. examined the pace of adjustment of retail interest rates in New Zealand, the amount of interest rate pass-through from whole sale rates to retail rates, and mortgage rates with varying maturities. The study's authors used Philips and Loretan and Error correction econometric methodology to analyze sample data from 1994 to 2004. Complete pass through was found at certain retail rates by the authors. Adjustment of pass-through was determined to be symmetrical in this investigation. In their rescarch, Wang and Thai (2008) calculated the asymmetry of pass-through for the Hong Kong and Taiwan cases. In order to exat the long-term connection between retail rates and money market rates, the research used asymmetric threshold co integration (TAR). In addition, the authors discovered incomplete pass through in both Taiwan and Hong Kong when they used the EC EGARCH (1, 1) model. In both the deposit and loan markets, the report found upward stiffness and downward rigidity, respectively. Betyeen April 2001 and June 2007, Ozdemir (2009) projected a pass-through between Turkey's money market rate and the retail rates set by the bank, Asymmetrical and symmetrical error correction models were used in the investigation ‘The esearch found that in the long run, market rates fully impact both deposit and lending rates, but in the short run, lending rates are more flexible than deposit rates.‘Exchange Rates: Pakistan's income and strength are affected by exchange rates, Pressures from both inside and ‘outside the country affect many parts of the economy through exchange rates, which are dificult Hiow stable and strong Pakistan's economy is around the world is shown by the Pakistani Rupee's value compared to other currencies. Money and the economy of Pakistan are both shown by exchange rates. Inflation, interest rates, and budget measures all have a effect on exchange rates. In order to help the economy grow and keep people safe, the State Bank of Pakistan ‘manages monetary policy and exchange rates. The story goes beyond those limits. Foreign trade, the rates of goods, and pol is all have an effect on Pakistan's exchange rate, ‘The complicated way these parts work together shows how world markets are linked. Trade is controlled by the ‘exchange rate. If things change, Pakistan might be more or less competitive, which could have an impact on trade and economic growth? Changes in the exchange rate affect the rates of imports and the costs of paying back foreign loans. It is hard to balance short-term and long-term ‘objectives in Pakistan because of the exchange rate. Changing exchange rates, monetary policy. and foreign currencies are just afew ofthe difficult issues that politicians have to deal with. k's hard for Pakistan's economy to keep exchange rates stable. So, the goverment had to fill in the blanks and make the business stronger. A country’s strength and ability to respond to changes in the global economy are shown by its stable exchange rate. This is both strategic and financial Inflation All over the world, central banks are trying to raise inflation to change how the market sees things and make monetary policy better. Information about inflation targeting shows how it is used in different countries and what it could be used for as @ monetary policy tool. We should ‘examine Pakistan's economy before applying these findings there, since it might have arigid monetary strategy and high interest rates. In order to change what the market thinks will happen ‘and make monetary policy better, central banks around the world use infla jon targeting, Pakistan has an economy that is affected by interest rates, inflation, and foreign deficits. Inflation and financial stabil ty could be affected by high interest rates and a strict monetary policy. It is ‘emphasized in the book that targeting inflation gives the central bank a basic base and makes it responsible. Inflation objectives in numbers, price stability over the long nun, clear policy objectives, and open monetary policy are all parts of the approach. But it's important to examine 3these ideas in light of Pakistan's spending rules. Targeting inflation lowers inflation rates and makes countries less volatile, as shown by the statisties. Researchers in economics are still arguing about inflation control and economic growth. As a result of higher interest rates, some people say that objectives to lower inflation can lead to stable biases and slow down economic ‘growth, Pakistan has to choose between having low and stable inflation and good economic growth, This makes things more difficult. It stresses the importance of foreign deficits in ‘maintaining economic stability through its examination of current account bakanees, especially the differences between countries that aim inflation and those that do not. Foreign exchange rates and the country’s funds can be affected by Pakistan's rigid monetary policy and high interest rates, Business Investment: People report financial stability and monetary policy in EDEs and they do not consider about how Pakistan's rigid monetary policy affects business investment, It gives us a background for understanding bigger economic issues and policy worries that might have an effect on this, approach, Because Pakistan is a developing market economy (EDE) with weak financial markets and economic problems, itis important to look into how rigid monetary policy affects business investment. The paper investigates about macro-prudential policy, slower economic growth, and lower foreign currency risk. These things show us how a strict monetary policy, like high interest rates or a lot of rules might change how muich companies spend, Money and economic growth might not work as well in developing countries with weak financial markets and strict macro-prudential rules. Pakistan does not connect credit to growth, so the credit boom and bust patterns seen in rich countries might not apply to Pakistan. When looking at how a rigid monetary policy affects business spending, we need to take Pakistan's financial and economic problems into account. Basel III and other macro-prudential rules cannot help the ‘country’s reserves, according to the story. When we consider about these statements again, we ‘can see that economic growth and business spending can have pros and cons. Foreign Reserves Changes in foreign monetary policy and other outside factors have an effect on Pakistan's main ates about how Pakistan's economy reacts to changes in economic statistics, It investi 4international trade, but not how a rigid monetary policy affects funds from other countries. The book says that we could look into foreign money when monetary policy is rigid. Pakistan's foreign cash could be hurt by strict rules and interest rates that do not change. The piece investigates about how Pakistan's financial markets are not very connected to those in the US and how changes in foreign monetary policy have less of an effect on Pakistan than on other developing countries. If foreign monetary policy makes it wsier to get money. prices go up in the home country through the trade channel, but the interest rate channel responds later. This means that changes in policy made in response to shocks from outside the country can have an effect on inflation and foreign funds. ‘Changes in the prices of imports and exports show how Pakistan's economy is affected by changes in world commodity prices, especially oil prices, and the trade balance. For example, ‘goods and money prices could be affected by rigid monetary policy. Exchange rate changes affect the prices of goods shipped and bought in the country, making monctary policy and trade between the two countries difficult. For these reasons, Pakistan's strict monetary policy might make it harder to build up and keep up foreign savings. By making changes in interest rates and shocks from outside the country harder, this method could hurt the country's trade balance, money flows, and image around the world For security reasons, Pakistan might need to find a mix between keeping its economy stable and getting money from other countries. The report does not say directly how strict monetary policy affects foreign reserves, but it does help us to consider about how monetary policy, extemal shocks, and other economic factors affect Pakistan's forcign reserves, Economic Growth: ‘There are problems and hopes for Pakistan's economy, and this report explores how monetary policy affects things like interest rates, inflation, and foreign currency. The report explores different types of monetary policy affect overall changes in the economy and foreign funds. Under rigid monetary policy, the effects of macro-prudential steps on economic growth are also looked at. To solve the problems caused by high interest rates, financial laws, especially Basel IL, need to be explored Due to the rigid Monterey polic trends and predicts What might happen in the future, taking into aecount both out the report explores past economic de causes and 5Pakistan's unique challenges to long-term economic growth. Since 1990, Pakistan's economy has grown from time to time, with booms followed by busts. The government's debt has grown because of twin deficits, which have made this risky trend stronger. The main part of the government budget goes to paying off debt, which is a worry When foreign currency siocks are running low. Recent financial inequalities are caused by structural limits that have been ignored, which shows that policy answers are not good enough. ‘The average growth rate over the last five years was only 4.7%, which is less than the objective ‘of S4%. This economic growth has been driven by spending, and the government has run up budget deficits due to unexpected and wasteful spending and slow income growth, Current account gaps get bigger when exports are low and imports are high. Savings minus investments made up 4.7% of GDP from 2018 to 2019, but growth rate was only 3.29%, a lot less than the 6.2% expected. ‘The budget imbalance has been 5.6% of GDP on average over the last five years with spending at 20.5% of GDP and income at 14.9%. The current account gap was 6.3% of GDP, oF US$19.9 billion, in 2017-2018. Inflation averaged 4.8%, but it hit 7% from July-April 2018-2019. In the past 30 yea politics, confusing economic policies and problems at home like floods and rebellion have made the tax system has changed from indirect to direct. Unstable it harder to find extra money in the budget. This report wants to talk about important worries people have about fiscal adjustment (FA), how well it works, and how it affects economic growth because ofthe budget deficit and larger economic problems, ‘Lending & Deposit Rat ‘The report explores how the monetary policy tools used by the State Bank of Pakistan affect ‘commercial bank loans using time series data from 1972 to 2021 and the ARDL (Auto Regressive Distributed Lag Model) method. The report finds that expanding monetary policies directly and indirectly make private loans more likely. The main result is that broad money expansion makes credit bigger. The report does explain that these control tools work best when used over ie, though. The report focuses on private sector loans as an important way for Pakistan's monetary strategy to reach people. The monetary leaders of developing countries should push credit as a major way to carry out monetary policy. Key to changing investment saves are the instt al arrangements that are made up of financial products and banking rules, Banks! roles in the financial markets shift, the credit route and the way that monetary policy is 6‘wansmitted are examined again. The report also investigates about Tobin's dynamic aggregative model and different points of view on how monetary factors can change interest rates, capital intensity, and economic welfare over time. The "bank lending channel” idea is looked at, with a focus on how it ean help banks that do not have fair access to non-deposit funds. Monetary policy changes can hurt smaller banks more if they depend on demand deposits and common stock. The State Bank of Pakistan is the government bank, the governing body for the financial industry, and the manager of the country’s foreign currency reserves. The most important job is to keep inflation and economic growth in check by handl 12 monetary policy. When monetary policy changes, the policy rate and, if needed, the Cash Reserve Requirement (CRR) and Statutory Liquid Reserve Requirement also change ‘The Analysis: By exploring Pakistan's monetary policy in depth, covering important topics like controlling inflation, interest rates, foreign savings, economic growth, and the State Bank of Pakistan's (SBP) central role. Initial emphasis is placed on how complicated monetary policy is questioning simple methods like the New Keynesian Taylor Rule and calling for a more complex ‘examine things like the production gap and feedback from monetary aggregates, Highlighted empirical results show a clear link between inflation and interest rates, with the money supply not having much of an effect on choices about monetary policy. Employing ‘Taylor's rule on the SBP shows a desire for a cyclical rather than an active policy stance, which is in line with the fact that the Pakistani economy has a big production gap? Somewhat briefly mentioned in the text, pass-through dynamics offer a comparison view by using studies from ‘other countries, especially transition economies in central and eastern Europe. Currency exchange rates are a major factor that affects Pakistan's income and strength. They have an impact on many economic factors, including inflation, interest rates, and budget measures. The report stresses the State Bank of Pakistan's many responsibilities in overseeing monetary policy and exchange rates. Controlling inflation includes how it changes market assumptions and makes monetary policy work well. Most importantly, the text shows that Pakistan's strict monetary policy, which is marked by high interest rates, can have a big effect on both inflation and financial stability. The analysis discusses about macro-prudential policy, economic growth, and the effect of foreign currency risk on business investment. As a result of Pakistan's unique a‘economic situation, it recognizes that standard methods for loan growth can not directly apply there, The problems with Keeping foreign funds when monetary policy is strict are mentioned. ‘This makes people speculate if Basel III and other macro-prudential rules are really protecting the country’s resources. By discussing the economic progress in Pakistan puts it in its past ‘context, pointing out trends and problems. As the budget imbalance has an effect on the general health of the economy, the link between fiscal reform and economic growth is stressed. The research on lending and savings rates shows how the SBP’s tools for monetary poliey affect loans given by private banks. Using Tobin's dynamic aggregative model and the idea of the "bank Tending channel,” it stresses how important private sector loans are and how monetary policy is, transmitted through credit channels. Exchange Rates in Pakistan (1990-2023)Business investment Trends in Pakistan (2000-2023) ‘Advancements inmedeting |S Mice seria oy mse aeons | SS fog cweray tx Coins Varied upeonity | 5 Coat ows meee sone Eponsngmeces voninunersorda carey iskremane sy tor reared fxr on curncy i Iscritgaonsrvags eooted Sota orate ere tk J heorered onrenesot cere fk Recon eer teoramic eran seonomie rowtnoonr Nedert conor owt rong economic gow Organ pay even pnenepy oc, tetas meres ecto pert cpr ‘een poley net ~ * eo e ¢ Economie Growth Trends - 1990 to Present reap Goh Rat)Comparison of Economic Variables between Expansion and Contraction Phases ct Intlaon Trend in Plistan 1970-2028) acre tig 10Lending & Deposit Rates in Patan 19722020) i sve Conelusi ‘The present report has examined the impacts of discount rate on different deposit rates. The Important results are following ‘* An asymmetric pass through i found in current study for short run, '* Which shows lack of implementation of monetary policies in the country?” ‘+ An integular pass through fixed deposit rates are extra complex to variat investigated in current study for long period as the longer deposit rates because they are usually seized for stock ‘© Upward rigidity is found in interest rate in all different maturity wise deposit rates. There is lack of adjustment and flexibility indifferent time periods according to the condition, ‘The reasons of asymmetric pass through in case of Pakistan might be adjustment costs, less developed financial markets, imperfect completion and a chief reason may be political instability aand pressure. The findings of this thesis reveal limited efficiency of monetary policy in case of Pakistan, aLimitations and Future Recommendations: We determined the relationship of monetary policy and different deposit rates. The results are encouraging. Due to lack of time and other limitations of availability of data we couldn't add ‘many variables in the current research. But this isthe start of research not the end of rescarch, Further, this esearch can be prolonged by adding more time series in current studies so, capital and investment level can also add in this study to embellishment its results and impact on fiscal policy. 2report INFORME DE ORIGINALIDAD 8x 6% 2x 2x INDICE DE SIMILITUD — FUENTES DE INTERNET — PUBLICACIONES TRABAJOS DEL ESTUDIANTE FUENTES PRIMARIAS. journals.iub.edu.pk Fuente de Internet 4x Submitted to Higher Education Commission Pakistan Trabajo del estudiante www.researchgate.net Fuente de Internet 1% YAveksel, Ebru, and KAtvAtlcA+m Metin A- zcan. "INTEREST RATE PASS-THROUGH IN TURKEY AND IMPACT OF GLOBAL FINANCIAL CRISIS: ASYMMETRIC THRESHOLD COINTEGRATION ANALYSIS", Journal of Business Economics and Management, 2012. Publicacién 1% gi ttu.edu.gh Fuente de Internet 1% Zakia Sultana, Md Nazmus Sadekin. "The impact of FDI on the agriculture sector: A case study from Bangladesh", Heliyon, 2023 Publicacién <1%Excluir citas Activo Excluir coincidencias Apagado Excluir bibliografia —Activo