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Macroeconomic Shocks and Unconventional Monetary PolicyImpacts on Emerging Markets$
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Naoyuki Yoshino, Pornpinun Chantapacdepong, and Matthias Helble

Print publication date: 2019

Print ISBN-13: 9780198838104

Published to Oxford Scholarship Online: August 2019

DOI: 10.1093/oso/9780198838104.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 23 November 2020

The Role of Institutions and Macroprudential Policy in Managing Spillovers from Quantitative Easing Policies

The Role of Institutions and Macroprudential Policy in Managing Spillovers from Quantitative Easing Policies

Chapter:
(p.263) 12 The Role of Institutions and Macroprudential Policy in Managing Spillovers from Quantitative Easing Policies
Source:
Macroeconomic Shocks and Unconventional Monetary Policy
Author(s):

Ansgar Belke

Ulrich Volz

Publisher:
Oxford University Press
DOI:10.1093/oso/9780198838104.003.0012

This chapter explores the impact of advanced countries’ quantitative easing on emerging market economies (EMEs) and how macroprudential policy and good governance play a role in preventing potential financial vulnerabilities. We use confidential locational bank statistics data from the Bank for International Settlements to examine whether quantitative easing has caused an appreciation of EMEs’ currencies and how it has done so, and whether this has in turn boosted foreign-currency borrowing, thus making EMEs vulnerable to balance sheet and maturity mismatch problems. While focusing our analysis on East Asian economies, we compare them with Latin American economies, which were also major recipients of quantitative easing capital inflows. We find that government effectiveness plays an important role in curbing excessive borrowing when the exchange rate is overvalued.

Keywords:   quantitative easing, emerging market economies, capital inflows, macroprudential policy, Asia, Latin America

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