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Lending Rate Spread Shock and Monetary Policy Arrangements: A Small Open Economy Model for ASEAN Countries

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  • Taiyo Yoshimi

Abstract

type="main"> We investigate the welfare implications of monetary policy arrangements in a small open economy, considering firms' bank-based finances that are widely observed in emerging ASEAN countries. The impact of an unexpected change in the lending rate spread, or a lending rate spread shock, depends on the presence of banking activity in the economy. This presence is important in Malaysia and Vietnam, where welfare effects of this type of shock are at least comparable to those of foreign monetary policy shocks. We also find that a rigid exchange rate arrangement amplifies the effect of a shock.

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  • Taiyo Yoshimi, 2014. "Lending Rate Spread Shock and Monetary Policy Arrangements: A Small Open Economy Model for ASEAN Countries," Asian Economic Journal, East Asian Economic Association, vol. 28(1), pages 19-39, March.
  • Handle: RePEc:bla:asiaec:v:28:y:2014:i:1:p:19-39
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    File URL: http://hdl.handle.net/10.1111/asej.12023
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    Cited by:

    1. Yong Ma, 2016. "Policy Shocks and Macroeconomic Fluctuations in a Two-country Dynamic Stochastic General Equilibrium Model: Evidence from China," Asian Economic Journal, East Asian Economic Association, vol. 30(1), pages 25-45, March.
    2. Ma, Yong, 2016. "Nonlinear monetary policy and macroeconomic stabilization in emerging market economies: Evidence from China," Economic Systems, Elsevier, vol. 40(3), pages 461-480.

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