The matter of balance adjustment generates many interesting reflections. For a long time, the equilibrium of the balance of payments was the focus of theoretical debates referring to international economy. At the beginning, it was reduced to the equilibrium of the balance of current...

It is said that a country’s currency peg can become currency manipulation representing protracted government intervention in the foreign exchange market that gives it unfair competitive advantage in international trade yet prevents effective balance of payments in its trade partners. Regarding...

We analyze how global and local factors affect portfolio allocation by euro area investors in emerging markets at the bond-level. First, cross-sectional analysis reveals a strong preference for home (Euro) currency bonds. Second, panel regressions, whether at the bond or aggregate flows level,...

This paper explores financial spillovers between emerging Asia and advanced economies using principal component analysis to extract common shocks in Asia. We first investigate stock market spillovers across the regions and find that spillovers from emerging Asia became significant after the...

The purpose of this paper is to explore the spillover effects Japan's negative interest rate policy (NIRP) had on Asian financial markets. Unlike the quantitative and qualitative monetary easing (QQE) without a negative interest rate, the NIRP not only had limited impacts on Japan's economy but...

We assess the importance of economic fundamentals in the transmission of international shocks to financial markets in various emerging market economies (EMEs), covering the so-called taper-tantrum episode of 2013 and seven other episodes of severe EME-wide financial stress since the mid-1990s....

Does the current account improve or deteriorate following a monetary policy expansion? We examine this issue theoretically and empirically. We show that a standard open economy DSGE model predicts that the current account response to a monetary policy shock depends on the degree of economic...

Large and persistent capital inflows can be a double-edged sword. Accompanying its many attractions is the tendency to display a boom and bust pattern (volatility and reversals) in addition to the possibility of causing rapid exchange rate appreciation, inflation and loss of monetary policy...

In this paper we show how interbank market frictions can play an important role in propagating and enhancing the effects of shocks in a currency union, and discuss the efficacy of two unconventional policy measures; multi-period central bank refinance operations and large scale asset purchases....

Applying a BVAR model, the present paper first identifies the possible drivers of Germany's TARGET claims. In this context, in terms of potential causes, a distinction is made between a rise in the global risk assessment, tensions within the euro area, and European monetary policy. It becomes...