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The Effects of Globalization on The Efficiency of Financial and Monetary Policies in Islamic Countries
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Robab Azali1   , Seyed Ali Paytkhti Oskooe 2, Monire Dizaji3 , AliReza Tamizi4 |
1- Ph.D.Student,Department of Economics Islamic Azad University,Tabriz, Iran
2- Associate professor, Department of Economics Islamic Azad University,Tabriz, Iran , oskooe@yahoo.com
3- Assistant professor, Department of Economics Islamic Azad University,Tabriz, Iran
4- Assistant Professor, Department of Econommics Payame Noor University |
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Abstract: (137 Views) |
A panel VAR model was adopted in this study to analyze the effects of globalization on the efficiency of monetary and fiscal policies of select Islamic countries within the 2000–2019 period. For this purpose, the KOF globalization index was employed as the globalization proxy through statistics extracted from the official website of the KOF Swiss Economic Institute. According to results, the globalization–liquidity interaction increases GDP fluctuations. Hence, globalization reduces the efficiency of monetary policies. The shocks caused by the globalization–interest rate interaction can also increase GDP fluctuations, something which indicates the inefficiency of monetary policies ensuing from the interest rate. Moreover, changes in the inflation rate (IFR) do not react to the shocks caused by globalization–liquidity and globalization–interest rate interactions in the long run. Therefore, long-term monetary policies can reduce IFR fluctuations through the interest rate, an outcome which is yielded by the efficiency of monitory policies through the interest rate. In addition, fluctuations in GDP and interest rate do not significantly react to the shocks caused by the interaction between globalization and governmental consumption expenditures in the long run. Thus, the interaction between financial globalization and financial policies will have no effects on fluctuations in GDP and interest rate, and the efficiency of financial policies will be intact.
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Article number: 3 |
| Keywords: Globalization, Monetary Policy Efficiency, Fiscal Policy Efficiency, Islamic Countries |
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Full-Text [PDF 1219 kb]
(47 Downloads)
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Article type: Research |
Subject:
Special
Received: 2023/05/27 | Accepted: 2023/12/18 | Published: 2024/03/18
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