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Global Market Discipline during Recent Policy Tightening

Author

Listed:
  • Anton E. Bobrov
  • Mark M. Spiegel

Abstract

Financial market discipline, in the form of movements in yields charged on sovereign debt of emerging economies, during the 2021 onset of U.S. monetary policy tightening depended heavily on domestic economic conditions. This pattern matches yield movements during the 2013 taper tantrum. The pattern suggests that, while advanced economy policies can influence emerging market financial conditions, domestic policies such as government spending levels are also important. However, the differing responses for pandemic-related spending versus the overall current account suggest that markets distinguished between needed COVID-19 fiscal support and other spending.

Suggested Citation

  • Anton E. Bobrov & Mark M. Spiegel, 2023. "Global Market Discipline during Recent Policy Tightening," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, vol. 2023(28), November.
    • Handle: RePEc:fip:fedfel:97245
    as

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