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International Monetary Policy Spillovers to Small Open Economies: Evidence from GVAR

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  • Saba, Danladi Ndayezhin

Abstract

This paper constructs a GVAR model that allows us to compare the propagation of interest rate shocks from AEs on the one hand and EMEs on the other to Small Open Economies (SOEs) of Mexico, Indonesia, Nigeria, and Turkey (MINT). We also explore the relative effect of these shocks on MINT compared to BRICS. We find that MINT countries generally responded to both AEs and EMEs' interest rate shocks, with EMEs exerting a stronger effect. Considering the MINT countries individually, we observed considerable differences in their response patterns, pointing towards heterogeneity. Finally, we also documented that while a shock to AEs and EMEs' interest rates boosts real GDP for MINT countries, the effect on BRICS is beggar-thy-neighbor.

Suggested Citation

  • Saba, Danladi Ndayezhin, 2024. "International Monetary Policy Spillovers to Small Open Economies: Evidence from GVAR," MPRA Paper 126271, University Library of Munich, Germany, revised 25 Sep 2025.
    • Handle: RePEc:pra:mprapa:126271
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    References listed on IDEAS

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    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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