Emerging economies are prone to ‘sudden stops’, characterized by a collapse in external borrowing and aggregate demand. Sudden stops may be triggered by a spike in world interest rates, which causes rapid private sector deleveraging. In response to a rise in interest rates, deleveraging is...

Monetary policy transmission in EMs has been found to be weak historically due to under-developed financial markets and heavy central bank intervention in FX markets that undermine the exchange rate channel. Against this background, this paper investigates the transmission of monetary policy,...

External capital accounts suffered during the COVID-19 crisis in Latin America and the Caribbean, but perhaps surprisingly the impacts were less severe than in previous crises. Gross capital inflows offset the outflows of residents, in sharp contrast to the global financial crisis of 2008/09...

This article estimates how economic growth and foreign direct investment affect environmental pollution. Our motivation is that less developed nations must make trade-off decisions between economic growth and environmental pollution. Thus, we employ the Autoregressive Distributed Lag Model...

This working paper is written by J. Scott Davis (Federal Reserve Bank of Dallas), Michael B. Devereux (University of British Columbia) and Changhua Yu (Peking University).We model sudden stops in a small open economy as rare discrete events precipitated by increases in the world risk-free rate....

The object of this paper is to discuss the introduction of securitization in emerging markets and the lessons that can be drawn from the global financial crisis. In the first section of the document, Part I looks at the general advantages of securitization -- as perceived prior to the global...

Capital flow volatility is a concern for macroeconomic and financial stability. Nonetheless, literature is scarce in this topic. Our paper sheds light on this issue in two dimensions. First, using quarterly data for 33 emerging markets and developing economies over the period 1970Q1-2016Q4, we...

This paper empirically examines the impact of public debt shocks on output and inflation in 34 emerging market economies (EMEs) using panel local projections over the period 2000 to 2022. The estimated results show that real gross domestic product (GDP) falls significantly after an unanticipated...

This paper examines the financial-stability challenges that will most likely be faced by European emerging-market countries in adapting to the post-crises environment, including the new financial-stability architecture and the other remaining weaknesses revealed by the global and European...