Global Spillover Effects of US Uncertainty

Bhattarai, Saroj; Chatterjee, Arpita; Park, Woong Yong

doi:10.24149/gwp331

Cited by 35 publications

(63 citation statements)

References 18 publications

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“…Policy rates also increase in response to net capital outflow shocks, likely to attract more foreign investment. These results are broadly consistent with those in the literature (Obstfeld et al, 2005;Aizenman et al, 2016;Aizenman et al, 2017;Han and Wei, 2018;Cavallino and Sandri, 2020;Bhattarai et al, 2020).…”

Section: Macroprudential Regulation and Monetary Policysupporting

confidence: 93%

“…This could be an important channel through which macroprudential regulation may enhance macroeconomic stability. Central banks in emerging markets are generally reluctant to cut policy rates when global financial conditions tighten even after controlling for expected inflation (Obstfeld et al, 2005;Aizenman et al, 2016;Aizenman et al, 2017;Han and Wei, 2018;Cavallino and Sandri, 2020;Bhattarai et al, 2020). This is likely because they fear that a sharp exchange rate depreciation or large capital outflows may jeopardize financial stability.…”

Section: By Cumulatingmentioning

confidence: 99%

“…However, even in emerging markets with flexible exchange rates, several central banks tend to increase policy rates in response to a US monetary tightening or a spike in the VIX, even after controlling for inflation (Obstfeld et al, 2005;Aizenman et al, 2016;Aizenman et al, 2017;Han and Wei, 2018;Cavallino and Sandri, 2020;Bhattarai et al, 2020). This is possibly to limit fluctuations in exchange rates and capital flows that may undermine financial stability.…”

Section: Macroprudential Regulation and Monetary Policymentioning

confidence: 99%

See 2 more Smart Citations

Dampening Global Financial Shocks

Bergant¹,

Grigoli²,

Hansen³

et al. 2020

IMF Working Papers

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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.

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Section: Macroprudential Regulation and Monetary Policysupporting

confidence: 93%

Section: By Cumulatingmentioning

confidence: 99%

Section: Macroprudential Regulation and Monetary Policymentioning

confidence: 99%

See 1 more Smart Citation

Dampening Global Financial Shocks

Bergant¹,

Grigoli²,

Hansen³

et al. 2020

IMF Working Papers

View full text Add to dashboard Cite

show abstract

“…Auerbach and Gorodnichenki (2015) note that estimated fiscal multipliers between one large economy and others linked by trade and finance are not always positive but they can be at least as large as the effects of domestic fiscal expansions in those economies. According to Eggertsson et al (2016) and Bhattarai et al (2016), such spill-overs are enlarged by the approach to zero interest rates in an integrated global financial market. This issue is addressed using a modelling approach by McKibbin and Stoeckel (2012) and McKibbin et al (2014).…”

Section: Fiscal Spill-oversmentioning

confidence: 99%

Secular Stagnation: Determinants and Consequences for Australia

Taylor

Tyers

2017

Economic Record

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Slack OECD economic performance and weaker macroeconomic policy support Summers's reuse of the phrase ‘secular stagnation’. Globalisation has redirected growth towards emerging economies, and anticipated rates of return on investment are impaired by perceived risk, institutionalised risk aversion, ageing and dependency, declining commitments to public investment and research and development with rising shares directed to health, retained trade distortions, industrial concentration and slower human capital accumulation, not to mention unexpected global abundance of fossil fuels and a slower Chinese economy. The information and literature supporting these concerns is reviewed and implications for global and Australian policy are inferred.

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“…Auerbach and Gorodnichenki (2015) note that estimated fiscal multipliers between one large economy and others linked by trade and finance are not always positive but they can be at least as large as the effects of domestic fiscal expansions in those economies. According to Eggertson et al (2016) and Bhattarai et al (2016), such spill-overs are enlarged by the approach to zero interest rates in an integrated global financial market. This issue is addressed using a modelling approach by McKibbin and Stoeckel (2012) and McKibbin et al (2014).…”

Section: Fiscal Spill-oversmentioning

confidence: 99%

Secular Stagnation: Determinants and Consequences for Australia

Taylor

Tyers

2017

SSRN Journal

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Larry Summers' re-use of the phrase appears justified in the present global economic climate since many factors contribute to comparatively poor OECD economic performance and weakening macroeconomic policy instruments. Some are measurement issues and others might be seen as the downsides of globalisation, which has integrated financial markets and redirected growth from the advanced toward the emerging economies. Yet measurable rates of return on investment do appear to be impaired by rises in perceived investment risks, institutionalised risk aversion, increased ageing and dependency, declining shares of government spending in public investment and R&D with rising shares of these directed to health, the retention of trade distortions, new concentration in industrial structure and a slower rate of human capital accumulation, not to mention an unexpected global abundance of fossil fuels and a slower Chinese economy. The information and literature supporting these concerns is reviewed and implications for global and Australian policy are inferred.

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Global Spillover Effects of US Uncertainty

Cited by 35 publications

References 18 publications

Dampening Global Financial Shocks

Dampening Global Financial Shocks

Secular Stagnation: Determinants and Consequences for Australia

Secular Stagnation: Determinants and Consequences for Australia

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