A Critical Review on Interest Rate as a Tool of Monetary Policy
DOI:
https://doi.org/10.30993/tifbr.v9i2.93Keywords:
interest rate, economic downturn, monetary policy, meta-analysisAbstract
Objectives: This research is aimed to critically review the relationship between interest rate and economic downturn
Methods: Meta-analysis.
Results: The existing monetary policy will always create higher inflation rate overtime triggering economic crisis in the long run. This is not merely about how the monetary authority strictly manages the supply and demand for money in the economy.
Conclusion:This paper concludes that interest rate give negative contribution to the economic growth.References
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Basu, Parantap; Ghoshb, Satyajit; and Kallianiotisb, Ioannis. (2001). “Interest risk, labour supply and unemployment”. Economic Modelling 18 2001. pp. 222-231
Bjerkenes, Håkon; Kiil, Håkon and Anker-Nilssen, Paal. (2010). “Austrian Economics: Application on Norwegian Business Cycles”. Master Thesis in Financial Economics. The Norwegian School of Economics and Business Administration.
Cashel, Brian. W. (2012). “Inflation and Unemployment: What is the Connection?”Conggressional Research Service. Accessed on October 22nd 2012. Available on: http://digitalcommons.ilr.cornell.edu/key_workplace/180
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Cooper, Harris. (2009). Research Synthesis and Meta-Analysis: A Step-by-Step Approach (Applied Social Research Methods. 4th Edition. Sage Publication.
Cooper, George. (2008). The Origin of Financial Crises: Central Banks, Credit Bubbles and the Efficient Market Fallacy. Harriman House Ltd. : UK
Cologni, Alessandro and Manera, Matteo. (2005). “Oil Prices, Inflation and Interest Rates in a Structural Cointegrated VAR Model for the G-7 Countries”. Retrieved on May 5TH 2014 from http://www.feem.it/Feem/Pub/Publications/WPapers/default.htm
D’Adda and Scorcu. n.d. Real Interest Rate and Growth: An Empirical Note. Working papers. Retrieved on May 5TH 2014 from http://amsacta.unibo.it/764/1/276.pdf
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Helmersson, Tobias and Selleby, Karl. (2009). “Empirical Testing of Austrian Business Cycle Theory”. Undergraduate Thesis. Jongkopin International Business School.
Ibrahim, Mansoor H. (2006). “Monetary Dynamics and Gold Dinar: An Empirical Perspective”. Journal of King Abdulaziz University – Islamic Economic, Vol. 20, No. 1, Jeddah (pp. 3-20)
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Meera, Ahmad Kameel., & Larbani, Moosa. (2009). Seigniorage of Fiat Money and the Maqāsid al-Sharī’ah: The Unattainableness of the Maqāsid. In A. K. Meera, Real Money (pp. 1-34). Kuala Lumpur: IIUM Press.
Menger, Carl. (1892). On the Origins of Money. Creative Commons Attribution. LicenseLudwig von Mises Institute
Mises, Ludwig Von. (1953). The Theory of Money and Credit. Translated by H.E. Batsan. Yale University Press: USA. Ludwig Von Mises Institute.
Mulligan, Robert F. (2006). “An Empirical Examination of Austrian Business Cycle Theory”. The Quarterly Journal of Austrian Economics. Vol. 9, No. 2 (Summer 2006), pp: 69-93.
Mulligan, Robert F. (2005). “The Austrian Business Cycle: a Vector Error-correction Model with Commercial and Industrial Loans”. Journal of Private Enterprise, Volume XXI, Fall 2005. Retrieved on October, 1st 2012 from http://journal.apee.org/images/d/d8/Fall2005_5.pdf
Obamuyi, Tomola, M. and Olorunfemi, Sola. (2011). “Financial Reforms, Interest rate Behaviour and Economic Growth in Nigeria”. Journal of Applied Finance & Banking, vol.1, no.4, 2011, 39-55
Parnaudeau, Miia. (2008). “European Business Cycle in the Austrian Framework”. The Quarterly Journal of Austrian Economics. Vol. 11, pp: 94-105.
Palalic, Ramo and Bajram, Narela. (2012). Why Gold Dinar in International Trade as Medium of Exchange: Descriptive Analysis of History of Gold Money, Trends, Perspectives and Implications. 3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo
Putriani, Diyah. (2013). “The Long Run Relationship between Interest Rate and Business Cycle: Austrian Economics vis A vis Islamic Perspective”. Master research paper. IIUM
Rehman, Atiq Ur and Ghaffari, Abubakar. (2012). “Failure of Interest Based Monetary Policy: Evidences From Selected Islamic and Non-Islamic Countries”. Paper presented in 5th International Conference on Islamic Banking and Finance. Amman, Jordan: October, 6th-8th 2012.
Ricardo, Rico and Putriani, Diyah. (2013). “Low Interest Rate and Business Cycle in Malaysia: Maqasid Al-Sharia Perspective. Working Paper.
Romer, (2012). Advanced Macroeconomics.Mac Graw Hill.
Thomas, C. Taylor. (1980). An Introduction to Austrian Economics. Cato Institute: Auburn-Alabama. Ludwig Von Mises Institute.
Sayyid Quthb. N.d. Retrieved on May, 5th 2013 from http://islampos.com/50186-50186/
Schulak, Eugen Maria and Unterkofler, Herbert. (2011). The Austrian School of Economics: A History of Its Ideas, Ambassadors, and Instituttions. Translated by Arlene Oost-Zinner. Ludwig Von Mises Institute: Auburn-Alabama.
Sechrest, Larry. J. (2006). “Explaining Malinvestment and Overinvestment”. The Quarterly Journal of Austrian Economics,Vol. 9, NO. 4: 27–38. Retrieved on May 5th, 2013 from http://mises.org/journals/qjae/pdf/qjae9_4_4.pdf
Sherman, Howard J. (1991). The Business Cycle: Growth and Crisis under Capitalism. New Jersey: Princeton University Press.
Tempelman, Jerry, H. (2010). “Austrian Business Cycle Theory and the Global Financial Crisis: Confession of a Mainstream Economics”. The Quarterly Journal of Austrian Economics, Vol. 13, No. 1 (2010)
Toutounchian, Iraj. (2009). Islamic Money and Banking: Integrating Money in Capital Theory. Singapore: John Wiley Pte. Ltd.
Udoka and Rolan. (2012). “The Effect of Interest Rate Fluctuation on the Economic Growth of Nigeria, 1970-2010”. International Journal of Business and Social Science Vol. 3 No. 20 [Special Issue – October 2012]
Zaman, Asad. (2011). Crisis in Islamic Economics: Diagnosis and Prescription. 8th International Conference on Islamic Economics and Finance. Retrieved on May 5th, 2013 from http://conference.qfis.edu.qa/app/media/252.
Zaman, Asad. (2012). Crisis in Islamic Economics: Diagnosis and Prescription: Comments. JKAU: Islamic Econ., Vol. 25 No. 2, pp: 227-250. Accessed on May 5th 2014.
Aliero, Hussaini Ibrahim. (1992). “Prohibition of Interest in An Islamic Economy: Rationale and Some Consequences”. Master Thesis. Unpublished. IIUM
Anker, Rasmus. (2011). “ABC Theory: Evidence from Scandinavia”. Master Thesis. Aarhus School of Business.
Basu, Parantap; Ghoshb, Satyajit; and Kallianiotisb, Ioannis. (2001). “Interest risk, labour supply and unemployment”. Economic Modelling 18 2001. pp. 222-231
Bjerkenes, Håkon; Kiil, Håkon and Anker-Nilssen, Paal. (2010). “Austrian Economics: Application on Norwegian Business Cycles”. Master Thesis in Financial Economics. The Norwegian School of Economics and Business Administration.
Cashel, Brian. W. (2012). “Inflation and Unemployment: What is the Connection?”Conggressional Research Service. Accessed on October 22nd 2012. Available on: http://digitalcommons.ilr.cornell.edu/key_workplace/180
Cashell, Brian. W. (2009). “What is A Recession, Who Decides When It Starts, and When do They Decide?” In Selected Essay. Editor: Perez, Nerea. M. and Ortega, June. A. 2009. Recessions: Prospects and Development. Nova Science Publisher. Inc.: New York.
Chapra, Muhammad Umer. (1996). “Monetary Management in an Islamic Economy” Islamic Economic Studies (IRTI, Jeddah), December, 1996, pp. 1-34. Accessed on May, 5th 2014. Retrieved from http://www.iiibf.org/elibrary/muchapra/B4.26%20Monetary%20Management%20in%20an%20Islamic%20Economy.pdf.
Chapra, Muhammad Umer. (1985). Towards a just monetary system: a discussion of money, banking and monetary policy in the light of Islamic teachings. Islamic Foundation: UK
Chapra, Muhammad Umer. (1984). “Money and Banking in Islamic Economy”. in M. Ariff, ed. (Jeddah: International Centre for Research in Islamic Economics, King Abdul Aziz University, (1982). Accessed on May, 5th 2014. Retrieved from http://www.iiibf.org/elibrary/muchapra/B4.1%20Money%20and%20Banking%20in%20an%20Islamic%20Framework.pdf
Cohen, Jacob. (1988). Statistical Power Analysis for Behavioral Science. Lawrence Erlbaum Associate.
Cooper, Harris. (2009). Research Synthesis and Meta-Analysis: A Step-by-Step Approach (Applied Social Research Methods. 4th Edition. Sage Publication.
Cooper, George. (2008). The Origin of Financial Crises: Central Banks, Credit Bubbles and the Efficient Market Fallacy. Harriman House Ltd. : UK
Cologni, Alessandro and Manera, Matteo. (2005). “Oil Prices, Inflation and Interest Rates in a Structural Cointegrated VAR Model for the G-7 Countries”. Retrieved on May 5TH 2014 from http://www.feem.it/Feem/Pub/Publications/WPapers/default.htm
D’Adda and Scorcu. n.d. Real Interest Rate and Growth: An Empirical Note. Working papers. Retrieved on May 5TH 2014 from http://amsacta.unibo.it/764/1/276.pdf
Doğrul, H. Gunsel and Soytas, Ugur. (2010). “Relationship between oil prices, interest rate, and unemployment: Evidence from an emerging market”. Energy Economics 32 (2010) 1523–1528.
Davidson, Roy Ruxton. (2013). “Austrian Business Cycle: An Application to New Zealand’s Recent Boom and Bust. Master Thesis. Retrieved on May 5th, 2013 from http://www2.gcc.edu/dept/econ/ASSC/Papers2013/ASSC2013-DavidsonRoy.pdf
Garrison, Roger W. (1994). “Hayekian Triangles and Beyond”. Retrieved on May 5th, 2013 from http://www.auburn.edu/~garriro/b3beyond.htm
Hazlitt, Henry. (1978). The Inflation crisis and how to resolve it. Arlington House, New York: Ludwig Von Mises Institute.
Hansen, Bruce E. and Seshadri, Ananth, Uncovering the Relationship between Real Interest Rates and Economic Growth (December 18, 2013). Michigan Retirement Research Center Research Paper No. 2013-303. Available at SSRN: http://ssrn.com/abstract=2391449 or http://dx.doi.org/10.2139/ssrn.2391449
Helmersson, Tobias and Selleby, Karl. (2009). “Empirical Testing of Austrian Business Cycle Theory”. Undergraduate Thesis. Jongkopin International Business School.
Ibrahim, Mansoor H. (2006). “Monetary Dynamics and Gold Dinar: An Empirical Perspective”. Journal of King Abdulaziz University – Islamic Economic, Vol. 20, No. 1, Jeddah (pp. 3-20)
Khin, Aye Aye; Seethaletchumy ; Thambiah; Chau Wong Hong; Mohamadpour, Babak and Balakrishnan, Gowri. (2014). Monetary Policy and Gross Domestic Product in Malaysia: An Econometric Investigation. Middle-East Journal of Scientific Research 19 (4): 602-609, 2014
Mankiw, Gregory. (2013). Macroeconomics. 8th edition. Worth Publisher
Meera, Ahmad Kameel., & Larbani, Moosa. (2009). Seigniorage of Fiat Money and the Maqāsid al-Sharī’ah: The Unattainableness of the Maqāsid. In A. K. Meera, Real Money (pp. 1-34). Kuala Lumpur: IIUM Press.
Menger, Carl. (1892). On the Origins of Money. Creative Commons Attribution. LicenseLudwig von Mises Institute
Mises, Ludwig Von. (1953). The Theory of Money and Credit. Translated by H.E. Batsan. Yale University Press: USA. Ludwig Von Mises Institute.
Mulligan, Robert F. (2006). “An Empirical Examination of Austrian Business Cycle Theory”. The Quarterly Journal of Austrian Economics. Vol. 9, No. 2 (Summer 2006), pp: 69-93.
Mulligan, Robert F. (2005). “The Austrian Business Cycle: a Vector Error-correction Model with Commercial and Industrial Loans”. Journal of Private Enterprise, Volume XXI, Fall 2005. Retrieved on October, 1st 2012 from http://journal.apee.org/images/d/d8/Fall2005_5.pdf
Obamuyi, Tomola, M. and Olorunfemi, Sola. (2011). “Financial Reforms, Interest rate Behaviour and Economic Growth in Nigeria”. Journal of Applied Finance & Banking, vol.1, no.4, 2011, 39-55
Parnaudeau, Miia. (2008). “European Business Cycle in the Austrian Framework”. The Quarterly Journal of Austrian Economics. Vol. 11, pp: 94-105.
Palalic, Ramo and Bajram, Narela. (2012). Why Gold Dinar in International Trade as Medium of Exchange: Descriptive Analysis of History of Gold Money, Trends, Perspectives and Implications. 3rd International Symposium on Sustainable Development, May 31 - June 01 2012, Sarajevo
Putriani, Diyah. (2013). “The Long Run Relationship between Interest Rate and Business Cycle: Austrian Economics vis A vis Islamic Perspective”. Master research paper. IIUM
Rehman, Atiq Ur and Ghaffari, Abubakar. (2012). “Failure of Interest Based Monetary Policy: Evidences From Selected Islamic and Non-Islamic Countries”. Paper presented in 5th International Conference on Islamic Banking and Finance. Amman, Jordan: October, 6th-8th 2012.
Ricardo, Rico and Putriani, Diyah. (2013). “Low Interest Rate and Business Cycle in Malaysia: Maqasid Al-Sharia Perspective. Working Paper.
Romer, (2012). Advanced Macroeconomics.Mac Graw Hill.
Thomas, C. Taylor. (1980). An Introduction to Austrian Economics. Cato Institute: Auburn-Alabama. Ludwig Von Mises Institute.
Sayyid Quthb. N.d. Retrieved on May, 5th 2013 from http://islampos.com/50186-50186/
Schulak, Eugen Maria and Unterkofler, Herbert. (2011). The Austrian School of Economics: A History of Its Ideas, Ambassadors, and Instituttions. Translated by Arlene Oost-Zinner. Ludwig Von Mises Institute: Auburn-Alabama.
Sechrest, Larry. J. (2006). “Explaining Malinvestment and Overinvestment”. The Quarterly Journal of Austrian Economics,Vol. 9, NO. 4: 27–38. Retrieved on May 5th, 2013 from http://mises.org/journals/qjae/pdf/qjae9_4_4.pdf
Sherman, Howard J. (1991). The Business Cycle: Growth and Crisis under Capitalism. New Jersey: Princeton University Press.
Tempelman, Jerry, H. (2010). “Austrian Business Cycle Theory and the Global Financial Crisis: Confession of a Mainstream Economics”. The Quarterly Journal of Austrian Economics, Vol. 13, No. 1 (2010)
Toutounchian, Iraj. (2009). Islamic Money and Banking: Integrating Money in Capital Theory. Singapore: John Wiley Pte. Ltd.
Udoka and Rolan. (2012). “The Effect of Interest Rate Fluctuation on the Economic Growth of Nigeria, 1970-2010”. International Journal of Business and Social Science Vol. 3 No. 20 [Special Issue – October 2012]
Zaman, Asad. (2011). Crisis in Islamic Economics: Diagnosis and Prescription. 8th International Conference on Islamic Economics and Finance. Retrieved on May 5th, 2013 from http://conference.qfis.edu.qa/app/media/252.
Zaman, Asad. (2012). Crisis in Islamic Economics: Diagnosis and Prescription: Comments. JKAU: Islamic Econ., Vol. 25 No. 2, pp: 227-250. Accessed on May 5th 2014.
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2016-04-19
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putriani, diyah, & towo, pras. (2016). A Critical Review on Interest Rate as a Tool of Monetary Policy. Tazkia Islamic Finance and Business Review, 9(2). https://doi.org/10.30993/tifbr.v9i2.93
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