How Does U.S. Monetary Policy Influence Economic Conditions in Emerging Markets?

Author/Editor:

Vivek B. Arora ; Martin D. Cerisola

Publication Date:

August 1, 2000

Electronic Access:

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Summary:

This paper quantifies the economic impact of changes in U.S. monetary policy on emerging market countries. We explore empirically how country risk, as proxied by sovereign bond spreads, is influenced by U.S. monetary policy, country-specific fundamentals, and conditions in global capital markets. In addition, we simulate the direct effects of a tightening in U.S. monetary policy on economic conditions in developing countries. While country-specific fundamentals are important in explaining fluctuations in country risk, the stance and predictability of U.S. monetary policy are also important for stabilizing capital flows and capital market conditions and fostering economic growth in developing countries.

Series:

Working Paper No. 00/148

Subject:

English

Publication Date:

August 1, 2000

ISBN/ISSN:

9781451856811/1018-5941

Stock No:

WPIEA1482000

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

28

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