{
  "title": "Fiscal and Monetary Nexus in Emerging Market Economies: How Does Debt Matter?",
  "publication": "IMF Working Papers, August 1, 2006",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/fiscal-and-monetary-nexus-in-emerging-market-economies-how-does-debt-matter-19374",
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  "summary": "This paper examines two main aspects of the interaction between fiscal and monetary policy in emerging market economies. First, it explores the interest rate-inflation relationship in economies with different levels of external and domestic public debt using panel- and crosssection data.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- The paper examines two main aspects of the interaction between fiscal and monetary policy in emerging market economies.\n- First aspect: explores the interest rate–inflation relationship in economies with different levels of external and domestic public debt using panel- and cross-section data.\n- Second aspect: utilizes high-frequency data from Brazil, Turkey, and Poland to examine how market-determined variables react to economic news.\n- Key summarized result: interest rate–inflation elasticity weakens with debt/GDP and external debt/GDP.\n- Key summarized result from high-frequency analysis: when vulnerabilities are high, budget news has the most significant impact on country spreads and interest rates, and the impact of monetary policy is weakened."
    },
    {
      "heading": "Empirical Approach and Scope",
      "content": "- Cross-country empirical analysis:\n  - Uses panel- and cross-section data to study the interest rate–inflation relationship across economies with varying levels of external and domestic public debt.\n- High-frequency case studies:\n  - Uses high-frequency data from Brazil, Turkey, and Poland to assess market reactions to economic news (budget news and monetary policy announcements)."
    },
    {
      "heading": "Main Findings",
      "content": "- Interest rate–inflation elasticity:\n  - Weakens with debt/GDP.\n  - Weakens with external debt/GDP.\n- Market reaction to news (high-frequency evidence for Brazil, Turkey, Poland):\n  - When vulnerabilities are high, budget news has the most significant impact on country spreads and interest rates.\n  - Under high vulnerabilities, the impact of monetary policy is weakened.\n\n---\n\n Content in this bundle\n\n- wp06184\n  - wp06184 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp06184 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/fiscal-and-monetary-nexus-in-emerging-market-economies-how-does-debt-matter-19374"
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    "Authors: Garima Vasishtha, Taimur Baig, Manmohan S. Kumar, Edda Zoli",
    "Published: August 1, 2006",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451864441.001",
    "The paper examines two main aspects of the interaction between fiscal and monetary policy in emerging market economies.",
    "First aspect: explores the interest rate–inflation relationship in economies with different levels of external and domestic public debt using panel- and cross-section data.",
    "Second aspect: utilizes high-frequency data from Brazil, Turkey, and Poland to examine how market-determined variables react to economic news.",
    "Key summarized result: interest rate–inflation elasticity weakens with debt/GDP and external debt/GDP.",
    "Key summarized result from high-frequency analysis: when vulnerabilities are high, budget news has the most significant impact on country spreads and interest rates, and the impact of monetary policy is weakened.",
    "Cross-country empirical analysis:",
    "High-frequency case studies:",
    "Interest rate–inflation elasticity:",
    "Market reaction to news (high-frequency evidence for Brazil, Turkey, Poland):",
    "**_wp06184**"
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