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Monetary Policy in a Globalized World
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Monetary Policy in a Globalized World

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Economics and Finance".

Deadline for manuscript submissions: 31 August 2025 | Viewed by 6220

Special Issue Editor

Dr. Lei Pan

E-Mail Website
Guest Editor
School of Accounting, Economics and Finance, Curtin University, Bentley, WA 6102, Australia
Interests: monetary economics; International economics

Special Issue Information

Dear Colleagues,

Over the past few years, the global economy has been going through the COVID-19 pandemic and the most severe recession since the “Great Depression”. As economies reopened, coupled with the Russia–Ukraine war, inflation rose to rates not seen in four decades for developed countries and since the 1990s in the developing world. This has led to governments and central banks all over the world quickly ratcheting up interest rates, raising questions about the effectiveness and coordination of monetary policies.

This Special Issue focuses on some of these key questions, including, but not limited to, novel research on monetary policy uncertainty; effectiveness of monetary policy; spillover effects of inflation; central bank credibility; negative interest rate policies; digital currencies; and monetary policies with which to rebalance the global economy after the COVID-19 pandemic. Both theoretical and empirical research are welcomed, as is the use of novel mathematical/econometric/statistical techniques for these topics.

Dr. Lei Pan
Guest Editor

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • monetary policy
  • interest rates
  • inflation
  • central bank
  • zero lower bound
  • quantitative easing
  • digital currencies
  • spillover effects

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Published Papers (4 papers)

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Research

74 pages, 7429 KiB  
Article
Monetary Policy Under Global and Spillover Uncertainty Shocks: What Do the Bayesian Time-Varying Coefficient VAR, Local Projections, and Vector Error Correction Model Tell Us in Tunisia?
by Emna Trabelsi
J. Risk Financial Manag. 2025, 18(3), 129; https://doi.org/10.3390/jrfm18030129 - 1 Mar 2025
Viewed by 1223
Abstract
This study assesses the informational usefulness of several uncertainty metrics in predicting the monetary policy and actual economic activity of Tunisia. We use a Bayesian time-varying vector autoregressive (VAR) model to identify uncertainty shocks sequentially. We complement the analysis with the use of [...] Read more.
This study assesses the informational usefulness of several uncertainty metrics in predicting the monetary policy and actual economic activity of Tunisia. We use a Bayesian time-varying vector autoregressive (VAR) model to identify uncertainty shocks sequentially. We complement the analysis with the use of local projections (LPs), a recently flexible and simple method that accommodates the effect of an exogenous intervention on policy outcomes. The findings suggest that shocks to global and spillover uncertainty are important in elucidating the dynamics of industrial production and consumer prices. The impulse response functions (IRFs) show that the central bank does not follow a linear-rule-based monetary strategy. The irreversibility theory, or the “precautionary” behavior, is tested in a vector error correction model (VECM). The money market rate impacts industrial production and consumer prices differently during high versus low uncertainty, depending on the uncertainty variable and the horizon (short versus long run). The effects can be insignificant or significantly dampened during high uncertainty, indicating that conventional monetary policy may be ineffective or less influential. The “wait and see” strategy adopted by economic agents implies that they do not take timely actions until additional pieces of information arrive. While this could not be the sole explanation of our findings, it conveys the importance of dealing with uncertainty in decision-making and highlights the necessity of a clear and credible communication strategy. Importantly, the central bank should complement interest rates with the use of unconventional monetary policy instruments for better flexibility. Our work provides a comprehensive and clear picture of the Tunisian economy and a focal guide for the central bank’s future practices to achieve macroeconomic objectives. Full article
(This article belongs to the Special Issue Monetary Policy in a Globalized World)
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14 pages, 248 KiB  
Article
The Dual-Mandate Debate: What Do Central Banks Really Target?
by Najib Khan
J. Risk Financial Manag. 2025, 18(1), 1; https://doi.org/10.3390/jrfm18010001 - 24 Dec 2024
Viewed by 1295
Abstract
Inflation targeting, a monetary policy framework, is criticized for its narrow mandate of safeguarding price stability only and neglecting other equally important macroeconomic variables. This negligence, according to the critics, might have had a role in the unprecedented, real business-cycle fluctuations observed in [...] Read more.
Inflation targeting, a monetary policy framework, is criticized for its narrow mandate of safeguarding price stability only and neglecting other equally important macroeconomic variables. This negligence, according to the critics, might have had a role in the unprecedented, real business-cycle fluctuations observed in the past. Hence, they advocate for mandating central banks with equally emphasizing employment and output growth along with inflation. Theoretical claims aside, the literature does not present any empirical evidence on how to determine whether a central bank adheres to a single or a dual mandate. This study is aimed at filling this gap by analyzing the reaction functions of various central banks, including the ones targeting inflation and the ones with no specific targets. Using the panel data from OECD countries, our findings question the prevalent theoretical misunderstanding in the literature: the central banks with no specific targets (the dual-mandate monetary policy regimes) appear to be targeting the rate of inflation only, whereas the central banks that are thought to have a single-mandate seem to be targeting inflation, output growth, and unemployment. These results are significant, both statistically and economically, and question the baseless criticism of the inflation-targeting regime for neglecting employment and output growth. Full article
(This article belongs to the Special Issue Monetary Policy in a Globalized World)
33 pages, 6638 KiB  
Article
Optimal Monetary and Fiscal Policies to Maximise Non-Parallel Risk Premia in Sovereign Bond Markets
by Sanveer Hariparsad and Eben Maré
J. Risk Financial Manag. 2024, 17(11), 510; https://doi.org/10.3390/jrfm17110510 - 15 Nov 2024
Cited by 1 | Viewed by 1293
Abstract
In this paper, we analysed several emerging market (EM) and developed market (DM) sovereign yield curves to identify the proportion of parallel and non-parallel shifts over time. We found that non-parallel shifts are more prevalent in EM due to higher political and economic [...] Read more.
In this paper, we analysed several emerging market (EM) and developed market (DM) sovereign yield curves to identify the proportion of parallel and non-parallel shifts over time. We found that non-parallel shifts are more prevalent in EM due to higher political and economic risks. Key drivers include systemic risk events like wars, debt distress, and pandemics. By backtesting a long butterfly strategy to extract non-parallel risk premia from June 2007 to March 2024, we observed that steeper slopes and greater curvature result in higher returns. We also quantified monetary and fiscal regimes to determine what types of policies are required to extract non-parallel risk premia from these sovereign yield curves. Our research suggests that countries with opposing monetary and fiscal policies possess higher return opportunities whilst countries with complementing policies require tactical butterfly strategies to optimise returns. Full article
(This article belongs to the Special Issue Monetary Policy in a Globalized World)
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23 pages, 5104 KiB  
Article
A Re-Appraisal of the Role of Monetary Policy: The Quantity Theory of Money through a Structural Vector Autoregressive Approach
by Antonio Focacci and Angelo Focacci
J. Risk Financial Manag. 2024, 17(8), 355; https://doi.org/10.3390/jrfm17080355 - 13 Aug 2024
Viewed by 1401
Abstract
The COVID-19 pandemic, the Russia–Ukraine and the Israel–Hamas conflicts, and the resulting global economic shocks will affect the world economy for several years. This paper analyzes and discusses monetary finance (MF) using the Quantity Theory of Money (QTM) to understand economic dynamics. To [...] Read more.
The COVID-19 pandemic, the Russia–Ukraine and the Israel–Hamas conflicts, and the resulting global economic shocks will affect the world economy for several years. This paper analyzes and discusses monetary finance (MF) using the Quantity Theory of Money (QTM) to understand economic dynamics. To achieve this goal, we utilize a Structural Vector Autoregressive (SVAR) identification scheme with sign restrictions on datasets from advanced economies. The findings indicate that monetary growth plays a role in short-term inflationary dynamics, while its effects are less significant in the medium to long term. The aim of the paper is to contribute to ongoing debate surrounding the potential strategies for addressing the economic downturn through the reintroduction of monetary finance (MF). Full article
(This article belongs to the Special Issue Monetary Policy in a Globalized World)
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