Global spillovers and domestic monetary policy
AbstractI discuss how the unconventional monetary policy measures implemented over the past several years – quantitative and credit easing, and forward guidance – can be analysed in the context of conventional models of asset prices, with particular reference to exchange rates. I then discuss alternative approaches to interpreting the effects of such policies, and review the empirical evidence. Finally, I examine the ramifications for thinking about the impact on exchange rates and asset prices of emerging market economies. I conclude that although the implementation of unconventional monetary policy measures may introduce more volatility into global markets, in general it will support global rebalancing by encouraging the revaluation of emerging market currencies.
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Bibliographic InfoPaper provided by Bank for International Settlements in its series BIS Working Papers with number 436.
Length: 42 pages
Date of creation: Dec 2013
Date of revision:
Balance sheet; money supply; portfolio balance; forward guidance; yield curve; spreads; signaling; capital flows; rebalancing;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-12-29 (All new papers)
- NEP-IFN-2013-12-29 (International Finance)
- NEP-MAC-2013-12-29 (Macroeconomics)
- NEP-MON-2013-12-29 (Monetary Economics)
- NEP-OPM-2013-12-29 (Open Economy Macroeconomics)
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