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Although the onset of the pandemic pressured monetary and fiscal policy across the globe, deficit finance was aided by the large, established debt markets in countries like the United States.  The expansionary efforts in emerging markets like Latin America put greater strains on their more limited capacity.  Our study analyzes data from seven Latin American countries, three European countries, three Asian countries, and the United States. We utilize panel vector autoregressive (VAR) models to explore the dynamic interactions and feedback mechanisms among the policy variables, while accounting for unobserved country-specific effects.  Our results demonstrate strong and significant interactions between monetary and fiscal policy around the time of the pandemic, with the primary causal effects running from fiscal to monetary policy.  Additionally, our results yield evidence of countercyclical policy reactions to inflation for both monetary and fiscal policy over the pandemic period.  

This study investigates the long-term and short-term relationships between different monetary aggregates (M0, M1, M2, and M3) and GDP in Saudi Arabia using the Engle-Granger cointegration test and the Granger causality test. The results reveal that M2 has the most stable long-term relationship with GDP, making it the most reliable aggregate for policy formulation. M1 also shows a strong relationship, while M3’s connection is comparatively weaker. The causality analysis indicates bidirectional relationships between GDP and M1, M2, and M3, suggesting that changes in these aggregates can both influence and be influenced by economic activity. In contrast, M0 shows no significant long-term relationship and only responds to changes in GDP, indicating its limited policy relevance. These findings highlight the importance of using broader aggregates like M2 for effective policy targeting in Saudi Arabia’s evolving economic landscape. The study provides crucial insights for policymakers in selecting appropriate monetary aggregates for long-term planning and short-term economic stabilization.

Following the 2007-2009 global financial crisis, the South African Reserve Bank (SARB) prioritised financial stability. This study assesses the impact of financial stability on South Africa's output and price stability, which is crucial for framing its monetary policy. Utilising a Structural Vector Autoregression (SVAR) approach, the influence of the Financial Conditions Index (FCI) on the Gross Domestic Product (GDP) and Consumer Price Index (CPI) between 1960Q1 and 2022Q4 was analysed. Results revealed a strong connection between these objectives. GDP drops after an FCI disturbance, whereas the CPI trends upwards when the SARB counters financial imbalances. This vital finding indicates a positive relation between enhanced financial conditions and output stabilisation but reveals a trade-off between price and financial stability. After a GDP shock, financial conditions improve, but they deteriorate following a CPI shock. If the SARB reacts by "mopping up" post-crisis, the policy rate typically drops, pointing to potential financial vulnerabilities. Both GDP and CPI react positively to FCI disturbances when SARB is passive. The evidence suggests that while financial stability bolsters output stability, it might endanger price stability. Thus, amongst other recommendations, South Africa's monetary policy authorities must lean against financial imbalances instead of mopping after a crisis

This paper investigates the asymmetric exchange rate pass-through (ERPT) to inflation in Nigeria. The study employed Autoregressive Distributed Lag (ARDL) and Nonlinear ARDL (NARDL) models from 2010Q1 to 2024Q2. The analysis incorporates key policy changes, such as the 2023 exchange rate unification, and explores both the short- and long-run impacts of exchange rate fluctuations on food and headline inflation. In particular, the study highlights the response and pass-through periods of exchange rate shocks, with depreciation demonstrating a stronger and more immediate effect on inflation than on appreciation. Results reveal that exchange rate depreciation exerts significant cost-push pressures, with a pass-through effect observed within 3 to 4 quarters, while the effect of appreciation is weaker and more prolonged. This asymmetry is especially pronounced for food inflation, where the dependency on imported goods accelerates the transmission of exchange rate shocks to consumer prices. The study also finds that cumulative depreciation has a much more pronounced effect on inflation. At the same time, appreciation offers minimal relief, reflecting Nigeria’s vulnerability to exchange rate volatility due to its reliance on imports. The findings show the importance of managing exchange rate fluctuations to control inflation, particularly given the asymmetry in how depreciation and appreciation affect prices. By providing a comprehensive analysis of both long- and short-run dynamics, this study contributes to the understanding of ERPT in Nigeria, offering insights for policymakers to implement targeted interventions to mitigate inflationary pressures in the context of exchange rate instability.

Following the 2007-2009 global financial crisis, the South African Reserve Bank (SARB) prioritised financial stability. This study assesses the impact of financial stability on South Africa's output and price stability, which is crucial for framing its monetary policy. Utilising a Structural Vector Autoregression (SVAR) approach, the influence of the Financial Conditions Index (FCI) on the Gross Domestic Product (GDP) and Consumer Price Index (CPI) between 1960Q1 and 2022Q4 was analysed. Results revealed a strong connection between these objectives. GDP drops after an FCI disturbance, whereas the CPI trends upwards when the SARB counters financial imbalances. This vital finding indicates a positive relation between enhanced financial conditions and output stabilisation but reveals a trade-off between price and financial stability. After a GDP shock, financial conditions improve, but they deteriorate following a CPI shock. If the SARB reacts by "mopping up" post-crisis, the policy rate typically drops, pointing to potential financial vulnerabilities. Both GDP and CPI react positively to FCI disturbances when SARB is passive. The evidence suggests that while financial stability bolsters output stability, it might endanger price stability. Thus, amongst other recommendations, South Africa's monetary policy authorities must lean against financial imbalances instead of mopping after a crisis

This paper investigates the asymmetric exchange rate pass-through (ERPT) to inflation in Nigeria. The study employed Autoregressive Distributed Lag (ARDL) and Nonlinear ARDL (NARDL) models from 2010Q1 to 2024Q2. The analysis incorporates key policy changes, such as the 2023 exchange rate unification, and explores both the short- and long-run impacts of exchange rate fluctuations on food and headline inflation. In particular, the study highlights the response and pass-through periods of exchange rate shocks, with depreciation demonstrating a stronger and more immediate effect on inflation than on appreciation. Results reveal that exchange rate depreciation exerts significant cost-push pressures, with a pass-through effect observed within 3 to 4 quarters, while the effect of appreciation is weaker and more prolonged. This asymmetry is especially pronounced for food inflation, where the dependency on imported goods accelerates the transmission of exchange rate shocks to consumer prices. The study also finds that cumulative depreciation has a much more pronounced effect on inflation. At the same time, appreciation offers minimal relief, reflecting Nigeria’s vulnerability to exchange rate volatility due to its reliance on imports. The findings show the importance of managing exchange rate fluctuations to control inflation, particularly given the asymmetry in how depreciation and appreciation affect prices. By providing a comprehensive analysis of both long- and short-run dynamics, this study contributes to the understanding of ERPT in Nigeria, offering insights for policymakers to implement targeted interventions to mitigate inflationary pressures in the context of exchange rate instability.

This study investigates the long-term and short-term relationships between different monetary aggregates (M0, M1, M2, and M3) and GDP in Saudi Arabia using the Engle-Granger cointegration test and the Granger causality test. The results reveal that M2 has the most stable long-term relationship with GDP, making it the most reliable aggregate for policy formulation. M1 also shows a strong relationship, while M3’s connection is comparatively weaker. The causality analysis indicates bidirectional relationships between GDP and M1, M2, and M3, suggesting that changes in these aggregates can both influence and be influenced by economic activity. In contrast, M0 shows no significant long-term relationship and only responds to changes in GDP, indicating its limited policy relevance. These findings highlight the importance of using broader aggregates like M2 for effective policy targeting in Saudi Arabia’s evolving economic landscape. The study provides crucial insights for policymakers in selecting appropriate monetary aggregates for long-term planning and short-term economic stabilization.

Although the onset of the pandemic pressured monetary and fiscal policy across the globe, deficit finance was aided by the large, established debt markets in countries like the United States.  The expansionary efforts in emerging markets like Latin America put greater strains on their more limited capacity.  Our study analyzes data from seven Latin American countries, three European countries, three Asian countries, and the United States. We utilize panel vector autoregressive (VAR) models to explore the dynamic interactions and feedback mechanisms among the policy variables, while accounting for unobserved country-specific effects.  Our results demonstrate strong and significant interactions between monetary and fiscal policy around the time of the pandemic, with the primary causal effects running from fiscal to monetary policy.  Additionally, our results yield evidence of countercyclical policy reactions to inflation for both monetary and fiscal policy over the pandemic period.