Divergent Emerging Market Economy Responses to Global and Domestic Monetary Policy Shocks

Choi, Woon Gyu; Kang, Taesu; Kim, Geunyoung; Lee, Byongju

doi:10.22617/wps179183-2

Search citation statements

Order By: Relevance

Paper Sections

Select...

By Cumulating1

Citation Types

Supporting

Mentioning

Contrasting

Year Published

2017

2023

Publication Types

Select...

Article6

Relationship

Self Cite0

Independent6

Authors

Journals

Cited by 6 publications

(1 citation statement)

References 22 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…1 See for example Canova (2005), Dedola et al (2017), Maćkowiak (2007), Georgiadis (2016), Choi et al (2017), Iacoviello and Navarro (2019), Bräuning and Ivashina (2020), and Vicondoa (2019).…”

Section: By Cumulatingmentioning

confidence: 99%

Dampening Global Financial Shocks

Bergant¹,

Grigoli²,

Hansen³

et al. 2020

IMF Working Papers

View full text Add to dashboard Cite

We show that macroprudential regulation can considerably dampen the impact of global financial shocks on emerging markets. More specifically, a tighter level of regulation reduces the sensitivity of GDP growth to VIX movements and capital flow shocks. A broad set of macroprudential tools contribute to this result, including measures targeting bank capital and liquidity, foreign currency mismatches, and risky forms of credit. We also find that tighter macroprudential regulation allows monetary policy to respond more countercyclically to global financial shocks. This could be an important channel through which macroprudential regulation enhances macroeconomic stability. These findings on the benefits of macroprudential regulation are particularly notable since we do not find evidence that stricter capital controls provide similar gains.

show abstract