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How Resilient Were Emerging Market Economies Through the 2022‑23 U.S. Monetary Tightening Cycle?

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Abstract

The cross-border spillover effects of shifts in U.S. monetary policy have long been a focus of academics and policymakers alike. A common finding in the literature is that changes in the stance of U.S. monetary policy have sizable effects on economic activity and financial markets in emerging market economies (EMEs). In this post, we analyze one specific aspect of these spillovers: how EMEs fared through the U.S. monetary policy tightening cycle of 2022-23 relative to the predictions of a model, which was calibrated to capture empirically relevant features of these economies based on historical data. We find that more vulnerable EMEs fared better in both financial market and growth outcomes than would be expected from our model, while the relatively less vulnerable fared a bit better than the model predictions for financial outcomes but substantially worse for growth outcomes.

Suggested Citation

  • Shaghil Ahmed & Ozge Akinci & Albert Queraltó, 2026. "How Resilient Were Emerging Market Economies Through the 2022‑23 U.S. Monetary Tightening Cycle?," Liberty Street Economics 20260626, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:103439
    DOI: 10.59576/lse.20260626
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    Keywords

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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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