Examining Monetary Policy Measures and Their Impacts during and after the COVID Era: OECD Perspectives

1. Summary

2. Questions for General Evaluation

Reviewer’s Evaluation (1)

Does the introduction provide sufficient background and include all relevant references?

Yes/Can be improved/Must be improved/Not applicable

Are all the cited references relevant to the research?

Yes/Can be improved/Must be improved/Not applicable

Is the research design appropriate?

Yes/Can be improved/Must be improved/Not applicable

Are the methods adequately described?

Yes/Can be improved/Must be improved/Not applicable

Are the results clearly presented?

Yes/Can be improved/Must be improved/Not applicable

Are the conclusions supported by the results?

Yes/Can be improved/Must be improved/Not applicable

Comments

Response

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The introduction section can be improved with scientific apparatus, such as goal (tasks or hypothesises) scientific novelty of research, results application etc.

Thank you very much for your valuable feedback. We have improved the Introduction section, including the scientific apparatus.

“The primary objective of this research is to analyse the effects of monetary policy measures on key economic indicators, such as GDP, inflation, and unemployment, during the COVID-19 pandemic period and the post-pandemic period.”

“Since this study is based on panel data analysis, employing a Panel ARDL model for 33 OECD countries from 2020 to 2023, it is important to note that each country has different exchange rate policy regimes and interest rate policy decisions. This study does not account for these differences due to data availability and to avoid complexities. Therefore, it relaxes the conditions regarding exchange rate policy regimes and distinct interest rate rules for the monetary policies of each respective country’

“The novelty of this research lies in its comparative analysis of the effectiveness and sustainability of different monetary policy responses across various OECD countries. It pro-vides valuable insights into the evolving role of central banks in crisis management and contributes to the broader understanding of how monetary policy can be adapted to un-precedented global challenges.”

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Reference list can be expanded.

Thank you very much for your comment. The reference list has been updated, and new references have been added.

In conclusion section it will be great to show the results application and future research prospective.

Thank you for your comment. We have made the necessary changes to the conclusion section.

“These findings underscore the importance of swiftly transitioning patterns of monetary policy measures in response to economic shocks like pandemics. However, governments must manage inflationary pressures, a notable drawback of expansionary monetary policy. In the meantime, governments should announce significant recovery plans focusing on public investments, such as strengthening healthcare systems during a pandemic and accelerating the production process immediately after immunisation for the virus. Therefore, monetary policies must remain adaptive and responsive to evolving economic conditions. Central banks should maintain a balance between controlling inflation and supporting economic activity through interest rate adjustments and quantitative easing.

On the other hand, occupations in the industrial and services sector must be adaptable to remote working based on the nature of the work. The adaptability of occupations to remote working depends significantly on the industry's technological readiness and the nature of the job tasks. Employers may need to invest in training and technology to facilitate this transition, ensuring that employees have the tools and skills necessary to work effectively from remote locations.”

“The successful implementation of these policy implications requires a coordinated effort between governments, healthcare providers, the private sector, and communities. By addressing both the health and economic aspects of the COVID-19 pandemic, these policies can help mitigate the impacts of the virus, promote recovery, and build more resilient and equitable societies for the future. Simultaneously , it is essential to launch comprehensive public health campaigns to educate the population about the benefits of vaccination and dispel myths and misinformation. Utilize multiple platforms, including social media, traditional media, and community outreach. Enhance the efficiency of vaccine distribution systems by investing in infrastructure improvements, such as cold chain logistics, storage facilities, and transportation networks.”

“Therefore, future research endeavors would be valuable, particularly through single-country analyses. Additionally, it would be beneficial to study how households and businesses in OECD countries responded to changes in interest rates, liquidity provisions, and other monetary measures during the COVID-19 pandemic. Analyzing the impact of these monetary policies on financial markets, including stock markets, bond markets, and housing markets in OECD countries, is also crucial.”

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1. Summary

2. Questions for General Evaluation

Reviewer’s Evaluation

Does the introduction provide sufficient background and include all relevant references?

Yes/Can be improved/Must be improved/Not applicable

Are all the cited references relevant to the research?

Yes/Can be improved/Must be improved/Not applicable

Is the research design appropriate?

Yes/Can be improved/Must be improved/Not applicable

Are the methods adequately described?

Yes/Can be improved/Must be improved/Not applicable

Are the results clearly presented?

Yes/Can be improved/Must be improved/Not applicable

Are the conclusions supported by the results?

Yes/Can be improved/Must be improved/Not applicable

Comments

Response

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Some referencing in the study is incorrect. For instance, the use of references in the 28th, 176th, and 195th lines are not in line with standards.

Thank you very much for your comment. We have removed those lines and added new ones according to the standards.

“The successful deployment of COVID-19 vaccines increased confidence among consumers and businesses, leading to a resumption of economic activities. This boost in economic confidence accelerated recovery, prompting central banks to revise growth projections upwards. (Oskam and Davis, 2023)”

“Consequently, both traditional and non-traditional economists seem to agree on the importance of combining short-term supply-side policies with traditional Keynesian expansionary measures to avert a recession and address price fluctuations during the current crisis (Eichenbaum et al., 2021, van Aarle, 2017, and Godri Pollitt et al., 2020).

“Ortmans and Tripier (2021) present evidence that fiscal and monetary policy measures effectively lowered bond yields for European economies. In contrast, Lepeti and Fuentes-Albero (2022) studied the effects of an unanticipated decline in interest rates, concluding that monetary policy is likely to be ineffective at the height of the pandemic but should aid in sustaining the recovery in economic activity once the virus begins to dissipate”

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The font styles in the introduction section vary significantly in some paragraphs. These minor errors clearly indicate that the study has not been meticulously prepared.

Thank you for your comment. We have corrected all the formatting issues.

The design of the introduction section is quite inadequate. While attempts have been made to provide the purpose of the study at various points in the section, it appears disjointed. The coherence of the introduction section of the study is quite lacking.

Thank you very much for your comment. We have amended the introduction as suggested.

“The primary objective of this research is to analyse the effects of monetary policy measures on key economic indicators, such as GDP, inflation, and unemployment, during the COVID-19 pandemic period and the post-pandemic period.”

“Since this study is based on panel data analysis, employing a Panel ARDL model for 33 OECD countries from 2020 to 2023, it is important to note that each country has different exchange rate policy regimes and interest rate policy decisions. This study does not account for these differences due to data availability and to avoid complexities. Therefore, it relaxes the conditions regarding exchange rate policy regimes and distinct interest rate rules for the monetary policies of each respective country.”

“The novelty of this research lies in its comparative analysis of the effectiveness and sustainability of different monetary policy responses across various OECD countries. It provides valuable insights into the evolving role of central banks in crisis management and contributes to the broader understanding of how monetary policy can be adapted to unprecedented global challenges.”

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The introduction section needs to be rewritten in its entirety. The literature gap is not clear. Moreover, the significance, purpose, and contributions of the study are unclear. Although it is mentioned that examining the effects of monetary policy changes in conjunction with COVID on macroeconomic factors is important, this is not sufficient.

The Introduction section has been amended, and the literature gap is now clearly mentioned as follows.

“Therefore, there is a potential research gap in conducting a comparative analysis of the effectiveness of unconventional monetary policy measures across various regions or countries in mitigating the economic impact of pandemics, as well as examining the broader implications of different monetary policy strategies on key macroeconomic variables such as GDP growth, inflation rates, and unemployment rates during such crises. “

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The selection of the OECD as the study's scope has not been adequately justified. If the OECD has been chosen, the academic reasons for this choice should be clearly stated.

Thank you for this valuable comment. The selection of the OECD as the study's scope has now been justified as follows.

“We included all 33 countries based on the availability of data. The study included Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Greece, Hungary, Iceland, Ireland, Italy, Korea, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Switzerland, Türkiye, United Kingdom, United States, Argentina, Brazil, Chile, Indonesia, Israel, Slovenia, and South Africa. These countries rep-resent a diverse range of economic structures, levels of development, and policy frameworks, making them a valuable sample for analyzing macroeconomic trends and policy responses. By including data from a broad range of OECD countries, the study aims to capture diverse experiences and variations in policy responses to the COVID-19 pandemic across different regions and economic contexts. The study's timeframe utilises fortnightly data, derived from the OECD statistics database, spanning from January 2020 to December 2023. Quarterly data was converted to a fortnightly basis using EViews software.”

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The indicators given in Figure 1 appear to be the average of OECD countries. If so, is it the 33 countries under investigation or all OECD members? There is no information about this.

Corrected in a meaningful way.

“The economic shocks of 2022 are exacerbating the ongoing economic scarring from the pandemic (Figure 1), particularly for all OECD economies.”

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The literature review section is quite inadequate. Instead of focusing on the Keynesian approach and the effects of past pandemics, the study's contributions should be presented by highlighting the focal points and findings of theoretical and empirical studies conducted with COVID (and afterward). Even after completing the literature review section, the gaps and contributions are still unclear.

We appreciate your comment and agree with its validity. We have added more literature highlighting the focal points and findings of theoretical and empirical studies conducted on COVID-19.

“Further, the high inflation following COVID-19 is not transitory but persistent. The recent economic recovery and the excessive supply of money from fiscal and monetary policies have increased the core inflation rate beyond a temporary phase (Gharehgozli and lee, 2022).”

“According to Wei and Han (2021), during the COVID-19 pandemic, neither conventional nor unconventional monetary policies had significant effects on all four financial markets: government bonds, stocks, exchange rates, and credit default swaps. However, unconventional monetary policies were slightly more effective than conventional policies, as they had some impact on the stock and exchange rate markets. On the other hand, the uncertainty effects of COVID-19 are much stronger, affecting aggregate demand, prices, the exchange rate, and the degree of trade openness, while complicating monetary policy interventions. To regulate demand and curb inflation, simulations conducted to assess monetary policy responses indicate that the policy is ineffective and would have no effect for at least 24 months (Andryusin, 2020).”

Clarified the research gap

“Existing research on monetary policy primarily focuses on assessing its effectiveness by examining its impact on stock markets in various regions, including North America, Africa, Asia, and Europe. Therefore, there is a potential research gap in conducting a comparative analysis of the effectiveness of unconventional monetary policy measures across various regions or countries in mitigating the economic impact of pandemics, as well as examining the broader implications of different monetary policy strategies on key macroeconomic variables such as GDP growth, inflation rates, and unemployment rates during such crises. Moreover, none of these studies have addressed the influence of COVID-19-induced interest rate uncertainty on the transmission of monetary policy in OECD countries. (Narayan, 2020, Phan and Narayan, 2020). Consequently, this study aims to bridge this gap by scrutinizing the impact of monetary policy measures undertaken by OECD countries on the macroeconomy during both the COVID-19 era and the subsequent post-COVID period. The insights garnered from this investigation are intended to serve as a guiding framework for effectively addressing future pandemics or economic shocks of a similar nature.”

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While definitions of variables and data sources are mentioned between lines 225-234, the selection, measurement, and sources of the variables should be stated more clearly and in detail.

Thank you for this comment. Added a brief discussion about selected variables.

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There is a very simple mistake on line 345. "Johansen" is misspelled.

Thank you for this comment. We added the necessary changes.

The findings reported as Table 3 on line 337 should belong to Table 4, I believe. It should have been Table 4.

Thank you for this comment. We added the necessary changes.

There is a contradiction between the study findings and the explanations in the abstract. It is stated in the abstract that a decrease in the interest rate reduces the growth rate and inflation rate while increasing unemployment. However, the results reported in the findings section are different.

Thank you for offering your valuable advice. Corrected the contradiction as follows.

“Despite initially high values, interest rates experienced a gradual decrease by the end of 2020. An unintended consequence of this policy was an increase in unemployment rates. However, the slowdown in economic activity and reduced production output prompted companies to curtail their hiring efforts, affecting unemployment rates during the pandemic”

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The study findings have not been adequately discussed in relation to the literature. Furthermore, the policy recommendations are quite weak.

We have now improved our finding.

“High levels of economic uncertainty can lead to decreased business and consumer confidence, which may result in reduced investments in capital, technology, and innovation. This, in turn, can slow down economic growth (Bahmani-Oskooee, and Mohammadian, 2021). On the other hand, when people are uncertain about their economic future specially in a pandemic period, they may save more and spend less or delay non-essential consumption, which can reduce overall economic activity.  This situation is align with the findings of the Hepburn et al., (2020)”

“Moreover, exchange rates have the potential to impact a country's trade balance, with a depreciating currency potentially improving the trade balance, thereby contributing positively to economic growth (Razzaque, 2017).”

We have added policy recommendations.

“The successful implementation of these policy implications requires a coordinated effort between governments, healthcare providers, the private sector, and communities. By addressing both the health and economic aspects of the COVID-19 pandemic, these policies can help mitigate the impacts of the virus, promote recovery, and build more resilient and equitable societies for the future. Simultaneously , it is essential to launch comprehensive public health campaigns to educate the population about the benefits of vaccination and dispel myths and misinformation. Utilize multiple platforms, including social media, traditional media, and community outreach. Enhance the efficiency of vaccine distribution systems by investing in infrastructure improvements, such as cold chain logistics, storage facilities, and transportation networks.”

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1. Summary

2. Questions for General Evaluation

Reviewer’s Evaluation

Does the introduction provide sufficient background and include all relevant references?

Yes/Can be improved/Must be improved/Not applicable

Are all the cited references relevant to the research?

Yes/Can be improved/Must be improved/Not applicable

Is the research design appropriate?

Yes/Can be improved/Must be improved/Not applicable

Are the methods adequately described?

Yes/Can be improved/Must be improved/Not applicable

Are the results clearly presented?

Yes/Can be improved/Must be improved/Not applicable

Are the conclusions supported by the results?

Yes/Can be improved/Must be improved/Not applicable

Comments

Response

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Although I believe the topic of this paper is new, I think the authors should explain the contribution of this paper more clearly.

Thank you very much for this comment. Amended as follows.

“The novelty of this research lies in its comparative analysis of the effectiveness and sustainability of different monetary policy responses across various OECD countries. It provides valuable insights into the evolving role of central banks in crisis management and contributes to the broader understanding of how monetary policy can be adapted to unprecedented global challenges.”

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The data frequency is unclear. I guess the empirical study is performed based on a monthly data, but the authors did not claim this clearly.

Thank you very much for this comment. We have amended as follows.

“ These countries represent a diverse range of economic structures, levels of development, and policy frame-works, making them a valuable sample for analyzing macroeconomic trends and policy responses. By including data from a broad range of OECD countries, the study aims to capture diverse experiences and variations in policy responses to the COVID-19 pandemic across different regions and economic contexts. The study's timeframe utilises fortnightly data, derived from the OECD statistics database, spanning from January 2020 to December 2023. Quarterly data was converted to a fortnightly basis using EViews software.”

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Why do the authors select only 33 countries in the whole OECD countries? What are them?

Thank you for this comment. We added the necessary changes.

“The Organisation for Economic Co-operation and Development, abbreviated as OECD is an international organisation of 38 countries committed to democracy and the market economy. We included all 33 countries based on the availability of data. The study included Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Greece, Hungary, Iceland, Ireland, Italy, Korea, Mexico, Netherlands, New Zealand, Nor-way, Poland, Portugal, Slovak Republic, Spain, Switzerland, Türkiye, United Kingdom, United States, Argentina, Brazil, Chile, Indonesia, Israel, Slovenia, and South Africa.”

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The authors employ an ARDL model, but I think NARDL can also be considered since it can capture the nonlinearity better.

We appreciate your comment and agree with its validity. We have justified the use of the ARDL model.

“This study employs a balanced panel dataset and a panel ARDL model to analyse the relationship between key macroeconomic policy targets. This model enables the differentiation between short-term and long-term effects. In other words, it allows for examining how variables adjust toward short-term and long-term equilibrium conditions. ARDL model allows intersection points, short-term coefficients, and error variances to change freely between groups but keeps the long-term coefficients the same. The PMG estimator enables us to investigate long-term homogeneity without imposing homogeneity of parameters in the short term (Pesaran et al., 1999).

The considered time period is sufficient to obtain meaningful results because the ARDL approach is suitable for generating both short-run and long-run elasticities from a small sample size (Duasa, 2007; Narayan, 2004).”

“The results of the panel ARDL analysis are shown in Table 5. The selection of the most appropriate ARDL model was made by the EViews software, based on the Akaike in-formation criterion and a maximum lag length of 3.”

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Some policy-related implications can be added.

Thank you very much for this comment. We have added more policy-related implications.

“The successful implementation of these policy implications requires a coordinated effort between governments, healthcare providers, the private sector, and communities. By addressing both the health and economic aspects of the COVID-19 pandemic, these policies can help mitigate the impacts of the virus, promote recovery, and build more resilient and equitable societies for the future. Simultaneously , it is essential to launch comprehensive public health campaigns to educate the population about the benefits of vaccination and dispel myths and misinformation. Utilize multiple platforms, including social media, traditional media, and community outreach. Enhance the efficiency of vaccine distribution systems by investing in infrastructure improvements, such as cold chain logistics, storage facilities, and transportation networks.”

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1. Summary

2. Questions for General Evaluation

Reviewer’s Evaluation (4)

Does the introduction provide sufficient background and include all relevant references?

Yes/Can be improved/Must be improved/Not applicable

Are all the cited references relevant to the research?

Yes/Can be improved/Must be improved/Not applicable

Is the research design appropriate?

Yes/Can be improved/Must be improved/Not applicable

Are the methods adequately described?

Yes/Can be improved/Must be improved/Not applicable

Are the results clearly presented?

Yes/Can be improved/Must be improved/Not applicable

Are the conclusions supported by the results?

Yes/Can be improved/Must be improved/Not applicable

Comments

Response

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I appreciate the engaging presentation and analysis of the article's relatively narrow topic, which could still be interesting to readers from different locations. The author makes excellent points and raises related questions, supported by a wide range of references. The article is scientifically sound and interesting, full of data collection. The authors' opinions and suggestions elevate the scientific standards of the article. Overall, the article's quality is good and ready for publication.

Thank you very much for your valuable feedback. The introduction, cited references, research design, research method, and conclusion sections have been improved.

Introduction

“The successful deployment of COVID-19 vaccines increased confidence among consumers and businesses, leading to a resumption of economic activities. This boost in economic confidence accelerated recovery, prompting central banks to revise growth projections up-wards. (Oskam and Davis, 2023).”

“The primary objective of this research is to analyse the effects of monetary policy measures on key economic indicators, such as GDP, inflation, and unemployment, during the COVID-19 pandemic period and the post-pandemic period.”

“Since this study is based on panel data analysis, employing a Panel ARDL model for 33 OECD countries from 2020 to 2023, it is important to note that each country has different exchange rate policy regimes and interest rate policy decisions. This study does not account for these differences due to data availability and to avoid complexities. Therefore, it relaxes the conditions regarding exchange rate policy regimes and distinct interest rate rules for the monetary policies of each respective country.

“The novelty of this research lies in its comparative analysis of the effectiveness and sustainability of different monetary policy responses across various OECD countries. It pro-vides valuable insights into the evolving role of central banks in crisis management and contributes to the broader understanding of how monetary policy can be adapted to un-precedented global challenges.”

Literature Review

“Consequently, both traditional and non-traditional economists seem to agree on the im-portance of combining short-term supply-side policies with traditional Keynesian expan-sionary measures to avert a recession and address price fluctuations during the current crisis (Eichenbaum et al., 2021, van Aarle, 2017), Godri Pollitt et al. (2020).”

“Ortmans and Tripier (2021) present evidence that fiscal and monetary policy measures effectively lowered bond yields for European economies. In contrast, Lepeti and Fuentes-Albero (2022) studied the effects of an unanticipated decline in interest rates, concluding that monetary policy is likely to be ineffective at the height of the pandemic but should aid in sustaining the recovery in economic activity once the virus begins to dissipate. Further, the high inflation following COVID-19 is not transitory but persistent. The recent economic recovery and the excessive supply of money from fiscal and monetary policies have in-creased the core inflation rate beyond a temporary phase (Gharehgozli and lee, 2022).”

“According to Wei and Han (2021), during the COVID-19 pandemic, neither conventional nor unconventional monetary policies had significant effects on all four financial markets: government bonds, stocks, exchange rates, and credit default swaps. However, unconventional monetary policies were slightly more effective than conventional policies, as they had some impact on the stock and exchange rate markets. On the other hand, the uncertainty effects of COVID-19 are much stronger, affecting aggregate demand, prices, the exchange rate, and the degree of trade openness, while complicating monetary policy interventions. To regulate demand and curb inflation, simulations conducted to assess monetary policy responses indicate that the policy is ineffective and would have no effect for at least 24 months (Andryusin, 2020).”

“Therefore, there is a potential research gap in conducting a comparative analysis of the effectiveness of unconventional monetary policy measures across various regions or countries in mitigating the economic impact of pandemics, as well as examining the broader implications of different monetary policy strategies on key macroeconomic variables such as GDP growth, inflation rates, and unemployment rates during such crises.”

The insights garnered from this investigation are intended to serve as a guiding framework for effectively addressing future pandemics or economic shocks of a similar nature.

Methodology

Equations has been simplified

Conclusion

“These findings underscore the importance of swiftly transitioning patterns of monetary policy measures in response to economic shocks like pandemics. However, governments must manage inflationary pressures, a notable drawback of expansionary monetary policy. In the meantime, governments should announce significant recovery plans focusing on public investments, such as strengthening healthcare systems during a pandemic and accelerating the production process immediately after immunisation for the virus. Therefore, monetary policies must remain adaptive and responsive to evolving economic conditions. Central banks should maintain a balance between controlling inflation and supporting economic activity through interest rate adjustments and quantitative easing.

On the other hand, occupations in the industrial and services sector must be adaptable to remote working based on the nature of the work. The adaptability of occupations to remote working depends significantly on the industry's technological readiness and the nature of the job tasks. Employers may need to invest in training and technology to facilitate this transition, ensuring that employees have the tools and skills necessary to work effectively from remote locations.

“The successful implementation of these policy implications requires a coordinated effort between governments, healthcare providers, the private sector, and communities. By addressing both the health and economic aspects of the COVID-19 pandemic, these policies can help mitigate the impacts of the virus, promote recovery, and build more resilient and equitable societies for the future. Simultaneously , it is essential to launch comprehensive public health campaigns to educate the population about the benefits of vaccination and dispel myths and misinformation. Utilize multiple platforms, including social media, traditional media, and community outreach. Enhance the efficiency of vaccine distribution systems by investing in infrastructure improvements, such as cold chain logistics, storage facilities, and transportation networks.”

“Therefore, future research endeavors would be valuable, particularly through single-country analyses. Additionally, it would be beneficial to study how households and businesses in OECD countries responded to changes in interest rates, liquidity provisions, and other monetary measures during the COVID-19 pandemic. Analyzing the impact of these monetary policies on financial markets, including stock markets, bond markets, and housing markets in OECD countries, is also crucial.

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