engleski

THE EFFECTIVENESS AND CONSTRAINTS OF MONETARY POLICY IN PANDEMIC TIME

The coronavirus has caused enormous negative consequences for humanity and the economy in whole, which also has a negative impact on the implementation of monetary policy. After the global financial crisis, most central banks have been implementing expansionary monetary policies. Due to that, during the pandemic, central banks are facing the lack of available monetary instruments, in order to improve the recovery of real sector. The aim of this paper is to analyse the impact of monetary policy tools that have been used as a response to the pandemic. The analysis considers the effect of monetary tools for encouragement bank’s credit activity and the inflation dynamics. The model is estimated with Vector Auto-regression analysis and impulse response functions that illustrate the response of CPI to the unconventional monetary policy instruments during the pandemic crisis. The findings prove that additional access to bank liquidity affect the inflation stability which positively influence to the financial system and the macroeconomic balance.

Monetary policy, inflation, pandemic

nije evidentirano