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Financial Fragility and the Exchange Rate Regime
Chang, Roberto; Velasco, Andrés - 2014
We study financial fragility, exchange rate crises, and monetary policy in an open economy version of a Diamond-Dybvig model. The banking system, the exchange rate regime, and central bank credit policy are seen as parts of a mechanism intended to maximize social welfare; if the mechanism fails,...
Persistent link: https://www.econbiz.de/10014048566
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On the Futility and Hazards of Monetary Heroics
Bhide, Amar - 2017
The decentralized enterprise that sustains the dynamism of economies makes top-down monetary interventions, such as quantitative easing, that target aggregates such as overall inflation, futile. Moreover, economic stability and dynamism also require prudent, decentralized lending to...
Persistent link: https://www.econbiz.de/10012962105
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Monetary Ease: A Factor behind Financial Crises? Some Evidence from OECD Countries
Ahrend, Rudiger - 2008
This paper addresses the question of whether and how easy monetary policy may lead to excesses in financial and real asset markets and ultimately result in financial dislocation. It presents evidence suggesting that periods when short-term interest rates have been persistently and significantly...
Persistent link: https://www.econbiz.de/10010298580
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Monetary policy under sudden stops
Cúrdia, Vasco - 2007
This paper proposes a model to investigate the effects of monetary policy in an emerging market economy that experiences a sudden stop of capital inflows. The model features credit frictions, debt denominated in foreign currency, imported inputs, and households that have access to the...
Persistent link: https://www.econbiz.de/10010283418
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Establishing credibility: Evolving perceptions of the European Central Bank
Goldberg, Linda S.; Klein, Michael W. - 2005
The perceptions of a central bank’s inflation aversion may reflect institutional structure or, more dynamically, the history of its policy decisions. In this paper, we present a novel empirical framework that uses high-frequency data to test for persistent variation in market perceptions of...
Persistent link: https://www.econbiz.de/10010283437
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Distribution, domestic politics, and monetary cooperation in East Asia
Hamilton-Hart, Natasha - 2011
Since the financial crises of 1997, East Asia has made modest but nonetheless significant steps towards greater regional integration and cooperation in the areas of finance and trade, accompanied by progress on institution-building at the regional level. Monetary cooperation, however, has not...
Persistent link: https://www.econbiz.de/10010286129
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Monetary policy, default risk and the exchange rate
Gonçalves, Carlos Eduardo Soares; Guimarães, Bernardo - London School of Economics and Political Science - 2010
In a country with high probability of default, higher interest rates may render the currency lessattractive if sovereign default is costly. This paper develops that intuition in a simple model andestimates the effect of changes in interest rates on the exchange rate in Brazil using data from...
Persistent link: https://www.econbiz.de/10008911505
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India's trilemma : financial liberalization, exchange rates and monetary policy
Hutchison, Michael M.; Sengupta, Rajeswari; Singh, Nirvikar - 2010
A key challenge for macroeconomic policy in open economies is how to simultaneously manage exchange rates, interest rates and capital account openness - the trilemma. This paper calculates a trilemma index for India and investigates its evolution over time. We find that financial integration has...
Persistent link: https://www.econbiz.de/10008698332
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Monetary ease: a factor behind financial crises? : Some evidence from OECD countries
Ahrend, Rudiger - 2010
periods of financial deregulation and/or innovation. Finding also some support for a link of countries' pre-crisis monetary … stance with the extent to which their financial sectors were hit during the recent crisis, the paper argues that …) unwinding of which helped trigger the recent financial market crisis. -- Interest rates ; monetary policy ; housing ; sub …
Persistent link: https://www.econbiz.de/10003952786
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The role of monetary policy in Turkey during the global financial crisis
Alp, Harun; Elekdağ, Selim - 2011
crisis, with a year-over-year contraction of 15 percent during the first quarter of 2009. At the same time, anticipating the … fallout from the crisis, the Central Bank of the Republic of Turkey (CBRT) decreased policy rates by an astounding 1025 basis … the recent recession have been? Taking the most intense year of the crisis as our baseline, namely 2009, counterfactual …
Persistent link: https://www.econbiz.de/10009157464