Caught in the Crosswinds: The Experiences of Selected Economies Responding to External Volatility with Multiple Policy Levers
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Summary:
A case study approach is used to assess the multi-pronged policy response of seven small financially open economies with flexible exchange rate regimes to external shocks following the global financial crisis. FX intervention was frequently used— including during outflow episodes to prevent disorderly depreciation and preserve financial stability. Monetary policy often considered both financial and external stability. Capital flow management measures were sometimes calibrated symmetrically over the cycle while macroprudential measures were mostly deployed during inflow episodes. Assessment of the macroeconomic conditions paints an inconclusive picture on the benefits or costs of such policies, suggesting the need for further analysis.
Series:
Working Paper No. 2020/225
Subject:
Central bank policy rate Depreciation Exchange rates Financial sector policy and analysis Financial sector stability Financial services Foreign exchange Inflation National accounts Prices
Frequency:
regular
English
Publication Date:
November 8, 2020
ISBN/ISSN:
9781513560342/1018-5941
Stock No:
WPIEA2020225
Pages:
22
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