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Effects Of Quantitative Easing On Asia: Capital Flows And Financial Markets

Author

Listed:
  • DONGCHUL CHO

    (KDI School of Public Policy and Management, Republic of Korea)

  • CHANGYONG RHEE

    (Asian Development Bank, Philippines)

Abstract

This paper studies the effects of US quantitative easing (QE) on Asia by examining capital flows and financial markets. After the global financial crisis (GFC), Asian economies with more open and developed capital markets experienced greater swings in capital inflows. In particular, large capital flows manifest more in portfolio investment and other investment such as bank loans than in foreign direct investment. Empirical analysis shows QE, QE1 in particular, significantly contributed to the rebounding of capital inflows to the region after the onset of the crisis by lowering domestic yield rates as well as CDS premiums. Although the currency value responses differed across countries, it appears that economies with stable exchange rates roughly coincide with those in which house prices have been rising, suggesting that monetary easing of advanced countries have affected Asian countries through either appreciation of currency values or increases in the prices of housing.

Suggested Citation

  • Dongchul Cho & Changyong Rhee, 2014. "Effects Of Quantitative Easing On Asia: Capital Flows And Financial Markets," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 59(03), pages 1-23.
    • Handle: RePEc:wsi:serxxx:v:59:y:2014:i:03:n:s0217590814500180
    DOI: 10.1142/S0217590814500180
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Willem THORBECKE, 2016. "Investigating the Effect of U.S. Monetary Policy Normalization on the ASEAN-4 Economies," Discussion papers 16070, Research Institute of Economy, Trade and Industry (RIETI).
    2. Meegan, Andrew & Corbet, Shaen & Larkin, Charles, 2018. "Financial market spillovers during the quantitative easing programmes of the global financial crisis (2007–2009) and the European debt crisis," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 56(C), pages 128-148.
    3. Willem THORBECKE, 2023. "Sectoral Evidence on Indonesian Economic Performance after the Pandemic," Discussion papers 23071, Research Institute of Economy, Trade and Industry (RIETI).
    4. Thi Bich Ngoc Tran & Hoang Cam Huong Pham, 2020. "The Spillover Effects of the US Unconventional Monetary Policy: New Evidence from Asian Developing Countries," JRFM, MDPI, vol. 13(8), pages 1-26, July.
    5. Bruno Bonizzi, 2017. "International financialisation, developing countries and the contradictions of privatised Keynesianism," Economic and Political Studies, Taylor & Francis Journals, vol. 5(1), pages 21-40, January.
    6. Ahmet Kahiloğulları, 2018. "Relationship between credit default swaps, direct foreign investments and Portfolio investments: Time Series Analysis for Turkey," Prizren Social Science Journal, SHIKS, vol. 2(3), pages 50-62, December.

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    More about this item

    Keywords

    Quantitative easing; capital flows; financial market; JEL Classification: E52; JEL Classification: E44; JEL Classification: F32;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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