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Interaction Between Real And Monetary Sectors Of The Economy In Terms Of Economic Instability

Author

Listed:
  • Ion PARTACHI

    (Academy of Economic Studies, Chisinau, Moldova)

  • Olga PANIS

    (Academy of Economic Studies, Chisinau, Moldova)

Abstract

This paper is a continuation of an article dedicated to the analysis of monetary policy shocks in the context of the interest rate channel operation in the Republic of Moldova during 2001-2012. This work represents the elaboration of the error correction model, which includes the relationship between the base rate and monetary aggregate M3 and inflation. The analysis, based on interaction and equilibration between the indicators in the real and monetary sector – is relevant in the current conditions of economic instability. As international practice of advanced economies show, there is strong correlation between the level of development of the (monetary) financial sector and economic growth, which is associated with such phenomena as: economic cyclicity, inflation. The present paper proposes the analysis of some transmission effects of monetary shocks, in the context of interaction mechanism of real and monetary sector of the economy. The main analysis and conclusions are based on the implementation of correlation tests, granger causality tests, analysis of variance decomposition of forecast and error correction model

Suggested Citation

  • Ion PARTACHI & Olga PANIS, 2013. "Interaction Between Real And Monetary Sectors Of The Economy In Terms Of Economic Instability," Journal of Social and Economic Statistics, Bucharest University of Economic Studies, vol. 2(2), pages 7-19, DECEMBER.
    • Handle: RePEc:aes:jsesro:v:2:y:2013:i:2:p:7-19
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    References listed on IDEAS

    as
    1. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
    2. Frederic S. Mishkin, 2001. "The Transmission Mechanism and the Role of Asset Prices in Monetary Policy," NBER Working Papers 8617, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Economic instability; Aggregate demand; Transmission monetary effects; Potential GDP; Impulse – response; Vector error correction; Forecast error variance decomposition;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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