## Exchange Market Pressure, Currency Crises, and Monetary Policy: Additional Evidence From Emerging Markets

_IMF Working Papers, January 1, 2002_

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## Bibliographic details
- Authors: Evan C Tanner
- Published: January 1, 2002
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451843132.001

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### Summary
- Extends previous work by examining the relationship between monetary policy and exchange market pressure (EMP) in 32 emerging market countries.
- EMP is defined and used as a gauge of the severity of crises; part of the analysis specifically focuses on crisis periods.
- Two variables gauge the stance of monetary policy: the growth of central bank domestic credit and the interest differential (domestic versus U.S. dollar).
- Evidence suggests that monetary policy plays an important role in currency crises.
- In most countries studied, shocks to monetary policy affect EMP in the direction predicted by traditional approaches: tighter money reduces EMP.

### Methodology and Scope
- Sample: 32 emerging market countries.
- Monetary policy indicators:
  - Growth of central bank domestic credit.
  - Interest differential (domestic versus U.S. dollar).
- EMP is used as the central measure of crisis severity; part of the paper specifically analyzes crisis episodes.
- Econometric approach includes vector autoregression (as listed in subject/keywords).

### Key Findings
- Monetary policy is an important determinant of currency crises as measured by EMP.
- Tighter monetary policy generally reduces EMP across most countries in the sample.
- The empirical evidence aligns with predictions from traditional approaches to monetary policy and exchange rate crises.

### Policy Implications and Recommendations
- Monetary authorities in emerging market countries can influence EMP through conventional monetary policy instruments.
- Managing the growth of central bank domestic credit and interest rate differentials can be policy tools to mitigate EMP during crisis periods.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/exchange-market-pressure-currency-crises-and-monetary-policy-additional-evidence-from-15566_