Monetary policy versus credits to agriculture
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Instytut Ekonomiki Rolnej i Gospodarki Żywnościowej - PIB
Acceptance date: 2013-12-15
Publication date: 2013-12-15
Zagadnienia Ekonomiki Rolnej / Problems of Agricultural Economics 2013;337(4):20–40
Nowadays the agricultural credit constitutes a necessary source of foreign capital. The credits origin in the banking system, which is in difficult position in the majority of the counties of the world since 2008. Public authorities were forced to intervene, sometimes using nonstandard solutions, when on the one hand, the economies found themselves in liquidation trap, and on the other they had to stop the threat of deflation. This helped to stabilise the economies, financial sectors and credit markets. However, the period of expansive monetary policy and most often the same fiscal policy must end someday. It is hard to predict how economies will react to such change in the direction of macroeconomic policy. The relations of agricultural credit, monetary policy and the national economy are complex and at the same time two-way. They are modified simultaneously by the use of preferential credit for farmers in certain countries. In quantitative terms, the agricultural credit, in general, has a minor impact on the monetary policy, economic growth and socio-economic development. This arises mainly from the small share of agriculture in joint credit supply and demand. On the other hand, the preferential credits can contribute to a small degree to the imbalance of public finances. Finally, the multiplier-accelerator mechanism explains the slight, downright overlooked impact of the agricultural credit on the fluctuation in the entire national economy.