Exchange Market Pressure and Monetary Policy: Asia and Latin America in the 1990s
AbstractExchange market pressure (EMP), the sum of exchange rate depreciation and reserve outflows (scaled by base money), summarizes the flow excess supply of money in a managed exchange rate regime. This paper examines Brazil, Chile, Mexico, Indonesia, Korea, and Thailand, and finds that monetary policy affects EMP as generally expected: contractionary monetary policy helps to reduce EMP. The monetary policy stance is best measured by domestic credit growth (since interest rates contain both policy- and market-determined elements). In response to higher EMP, monetary authorities boosted domestic credit growth both in Mexico (confirming previous research) and in the Asian countries. Copyright 2001, International Monetary Fund
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Bibliographic InfoArticle provided by Palgrave Macmillan in its journal IMF Staff Papers.
Volume (Year): 47 (2001)
Issue (Month): 3 ()
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Other versions of this item:
- Evan Tanner, 1999. "Exchange market Pressure and Monetary Policy - Asia and Latin America in the 1990s," IMF Working Papers 99/114, International Monetary Fund.
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
- F3 - International Economics - - International Finance
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
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