Is Credit Easing Viable in Emerging and Developing Economies? An Empirical Approach
IMF Working Papers, March 8, 2018
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- Is Credit Easing Viable in Emerging and Developing Economies? An Empirical Approach
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Bibliographic details
- Authors: Luis Ignacio Jácome, Tahsin Saadi Sedik, Alexander Ziegenbein
- Published: March 8, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484345160.001
Overview
- Authors: Luis Ignacio Jácome, Tahsin Saadi Sedik, Alexander Ziegenbein
- Publication date: March 8, 2018
- Paper type: IMF Working Paper No. 2018/043
- Core question: Whether credit easing is a viable policy tool to cope with banking crises in emerging and developing economies, based on empirical analysis.
Key empirical findings
- Credit easing in a large panel of emerging and developing economies is associated with:
- a sharp increase in domestic currency depreciation
- high inflation
- a substantial reduction in economic growth
- For advanced economies, the effects of credit easing are found to be benign.
Policy implications and recommendations
- Emerging and developing economies should be cautious when using credit easing because it may fuel adverse macroeconomic repercussions, including:
- currency depreciation pressures
- elevated inflation outcomes
- lower economic growth during banking crises
Subjects and keywords (as listed in the paper)
- Subject: Banking crises, Exchange rate adjustments, Financial crises, Foreign exchange, Inflation, Monetary expansion, Monetary policy, Prices, Systemic crises
- Keywords: Banking crises, central bank, credit easing, currency crises, currency depreciation, developing economy, effects of credit easing, Exchange rate adjustments, financial stability, Global, Inflation, inflation expectation, liquidity provision, macroeconomic stability, Monetary expansion, nominal exchange rate, nominal exchange rate depreciation, Systemic crises, WP