Essays On Financial Intermediation And Monetary Policy In Emerging Market Economies
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Essays On Financial Intermediation And Monetary Policy In Emerging Market Economies
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Author : Yunsang Kim
language : en
Publisher:
Release Date : 2020
Essays On Financial Intermediation And Monetary Policy In Emerging Market Economies written by Yunsang Kim and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with Economics categories.
In the second chapter, we offer an evaluation of claims by policymakers in the EMEs regarding adverse effects of the capital inflows that resulted from US monetary policy during the Great Recession. Our two-country model with financial frictions allows us to consider the welfare effects of contractionary shocks to capital quality under a passive US monetary policy. We compare these effects to the effects of the same shocks when US monetary policy responds with quantitative easing. We find that emerging-market complaints regarding the real exchange rate and current account are mostly due to the shock itself, and not to the US monetary policy. US monetary policy reacting to the shock brings welfare gains for both the US and the EMEs. The gains for the US are an order of magnitude larger than the welfare gains of the EMEs, reflecting the fact that a capital quality shock that originated in the US damages the US the most.
Essays On Financial Intermediation In Emerging Europe From Transition To Crisis
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Author : Jasna Atanasijević
language : en
Publisher:
Release Date : 2013
Essays On Financial Intermediation In Emerging Europe From Transition To Crisis written by Jasna Atanasijević and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
The main idea in this thesis is to analyze the macroeconomic implication of the micro-level failures of financial markets resulting from economic transformation of countries in Central and Eastern Europe. After first chapter which overviews the overall process of financial sector transition, financial integration and crisis transmission to the region of the Emerging Europe, the following three chapters cover the separate issues based on micro level data empirical analysis. The chapter 2 investigates the liberalized credit market resulting in its segmentation according to risk and transparency of borrowers on the case of Serbia. The empirical research is based on banks field survey and panel data estimation on database consisting of individual banks financial data. The Chapter 3 analyses the role of credit in the newly established monetary policy framework based on generalized method of moments estimation on Serbian banking sector data and points out to weak evidence on the role of credit in monetary policy transmission. The Chapter 4 examines the determinants of financing obstacle using probit estimation on the EBRD database (Business Environment and Enterprise Performance Survey) for 18 European transition economies and demonstrates that firms in productive sectors (manufacturing industry) have had relatively more problem in access to finance. The general conclusion resulting from the thesis is that the regulatory environment and specific policies related to financial sector in new market economies should encompass institutions to deal with information asymmetries and specific market failures that may lead to macroeconomic imbalances and propagation of external shocks.
Financial Crises In Emerging Markets
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Author : Alexandre Lamfalussy
language : en
Publisher: Yale University Press
Release Date : 2000-01-01
Financial Crises In Emerging Markets written by Alexandre Lamfalussy and has been published by Yale University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2000-01-01 with Business & Economics categories.
In this text an international banking expert grapples with issues that surround the trend toward financial globalization and its potential impact on financial fragility. He analyzes four major crisis experiences: Latin America, 1982-3; Mexico, 1994-5; East Asia, 1997-8; and Russia since 1998.
Essays On Monetary Policy In Emerging Market Economies
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Author : Phakawa Jeasakul
language : en
Publisher:
Release Date : 2011
Essays On Monetary Policy In Emerging Market Economies written by Phakawa Jeasakul and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
This dissertation addresses a number of important monetary policy issues in emerging markets, which are primarily related to capital flows and exchange rate movements and largely motivated by Thailand's experience. Thus, Chapter 1 reviews background information on Thailand's macroeconomic developments in the context of large and rapid exchange rate appreciation during 2006-2008. Chapter 2 develops a micro-founded macroeconomic model in which sterilized foreign-exchange (FX) interventions are effective in influencing currency movements as well as real allocations. The effectiveness of FX interventions rests on the existence of liquidity benefits from holding financial assets. The analysis shows that such sterilized FX interventions can affect the domestic interest rate relevant for the consumption-saving decision through the change in the financial system's liquidity condition even when the policy interest rate is held constant. Simulation exercises based on the calibration aiming to capture the Thai economy suggest that the reliance on sterilized FX interventions to deal with capital flows can be welfare-improving, mainly due to liquidity benefits. However, the effect of liquidity-based sterilized FX interventions on the exchange rate dynamics is small. Furthermore, an accommodative interest rate policy appears essential for sterilized FX interventions to be fully effective. Chapter 3 examines the viability of capital controls on inflows following Thailand's experience which experienced a stock market crash in consequence of the introduction of the unremunerated reserve requirement measure in December 2006. Both theoretical analysis and empirical evidence suggest that the predominant factor for the stock market crash was the punitive implicit tax rate that made any new foreign investment in the domestic stock market unprofitable. Occurring as a result of limited foreign participation, a revaluation of systematic risks relevant for idiosyncratic risk pricing as well as a reduction in stocks' liquidity led to a sharp increase in the equity premium. Consequently, share prices declined substantially. The importance of these two channels in triggering the stock market crash was largely supported by the findings that difference in covariances and trading frequency appear as the most important explanatory variables for changes in share prices across firms during the stock market collapse and rebound. In short, capital controls should remain a viable policy option provided that they are well-designed. Chapter 4 illustrates how to apply the methodology developed by Obstfeld and Rogoff (2005) and (2007) to estimate the magnitude of exchange rate fluctuations required for absorbing changes in financial flows in addition to facilitating adjustments of the current account towards its medium-term position, with a particular focus on analyzing Thailand's exchange rate fluctuations in the past two decades. The simulation-based analysis points out that the Thai baht has been heavily influenced by the development of capital flows, and also suggests that some exchange rate misalignments were evident over certain time periods. Specifically, the Thai baht seemed relatively weak during 1999-2001, consistent with the export-led growth model propelled by a competitive exchange rate value, but it then appeared justifiably strong in 2006 when the Bank of Thailand seriously concerned about large and rapid currency appreciation. Nevertheless, the dynamics of the Thai baht over the past year has become more aligned with underlying factors that drive exchange rate movements.
Essays On Financial Intermediation And Unconventional Monetary Policy
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Author : Lisa Monika Cycon
language : en
Publisher:
Release Date : 2018
Essays On Financial Intermediation And Unconventional Monetary Policy written by Lisa Monika Cycon and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
Essays In The Us Dollar Dominated International Financial Market
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Author : Zefeng Chen
language : en
Publisher:
Release Date : 2021
Essays In The Us Dollar Dominated International Financial Market written by Zefeng Chen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021 with categories.
This dissertation studies a special feature about the international financial market. Classical theories often assume that countries are symmetric, but realistically the international financial market is heavily US dollar dominated, which stimulates my interest to study whether this role of the US dollar can resolve numerous puzzles that classical theories are unable to reconcile with empirical facts, as well as to study policy implications. The role of the US in the international market is mainly unique in two aspects. First, the US dollar is the dominant currency used in international trade. Second, the US treasuries are considered as the most widely accepted safe assets. In this dissertation, the first two chapters study the safe asset role, and the third chapter explores the invoicing currency role. The first chapters analyzes the phenomenon called the US 'Exorbitant Privilege', which describes the fact that the US is the only large net borrower country in the world earning a positive net investment income. To rationalize this phenomenon, I propose a different theory about the role of US in the international financial system being a service provider, in contrast to the conventional view of an insurance provider, which predicts the US exorbitant privilege would vanish during the financial crisis, not supported by data. I build a two-country model with financial friction to explain the dynamics of the US external balance sheet and the dollar exchange rate. In the model, world financial intermediaries demand US safe assets for their convenience value, but US intermediaries do not demand foreign safe assets. Under an aggregate symmetric financial shock, the rest of the world buys more safe assets from the US despite a rise in convenience yield, the dollar appreciates, and the US takes advantage by buying more equities from the rest of the world at a low price. I show my mechanism can quantitatively explain the data, while a real shock triggering risk-sharing dynamic cannot. The second chapter is a paper completed with coauthors Shanaka J. Peiris and Sanaa Nadeem from the IMF. We take a perspective from Asian small open economies against external shocks driven by the US dollar. We focus on the banking sectors in those economics because in emerging Asia banks constitute the dominant source of financing consumption and investment, and bank balance sheets comprise large gross FX assets and liabilities. This paper extends the DSGE model of Gertler and Karadi (2011) to incorporate these key features and estimates a panel vector autoregression on ten Asian economies to understand the role of the banking sector in transmitting spillovers from the global financial cycle to small open economies. It also evaluates the effectiveness of foreign exchange intervention (FXI) and other macroeconomic policies in responding to external financing shocks. External financial shocks affect net external liabilities of banks and the exchange rate, leading to changes in credit supply by banks and investment. For example, a capital outflow shock leads to a deprecation that reduces the net worth and intermediation capacity of banks exposed to foreign currency liabilities. In such cases, the exchange rate acts as shock amplifier and sterilized FXI, often deployed by Asian economies, can help cushion the economy. By contrast, with real shocks, the exchange rate serves as a shock absorber, and any FXI that weakens that function can be costly. We also explore the effectiveness of the monetary policy interest rate, macroprudential policies (MPMs) and capital flow management measures (CFMs). The third chapter written with coauthors Zhengyang Jiang and Timothy Mok, exhibits a channel of how US monetary policy can have an asymmetric spillover effects and hence how the US can take advantage. We develop a model of two countries, U.S. and Japan. Households in both countries need to hold cash in advance to purchase consumption goods: The U.S. dollar can be used to purchase both countries' goods, while the Japanese yen can only be used to purchase Japan's goods. Under these constraints, an expansionary U.S. monetary policy leads to (1) a larger U.S. trade deficit, (2) larger foreign holdings of the U.S. dollar, and (3) an appreciation of the U.S. real exchange rate. In contrast, the Japanese monetary policy has none of these real effects. Beyond asymmetric monetary effects, our novel mechanism also explains the correlation between consumption and real exchange rate, and the connection between foreign economic growth and the demand for the U.S. dollar.
Economic Policies In Developing And Emerging Market Economies
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Author : Shengzu Wang
language : en
Publisher:
Release Date : 2008
Economic Policies In Developing And Emerging Market Economies written by Shengzu Wang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with Developing countries categories.
Essays On Monetary Policy In Developing Countries
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Author : Zhandos Ybrayev
language : en
Publisher:
Release Date : 2019
Essays On Monetary Policy In Developing Countries written by Zhandos Ybrayev and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
This dissertation explores the effects of monetary policy on economic inequality, asset prices and unemployment in developing countries. Emerging market economies are structurally different from advanced economies as they are generally associated with greater financial frictions, underdeveloped financial markets, as well as both a high average level and unequal access to dollarized assets, among others. Thus, the study on the impact of monetary policy in emerging economies requires additional specifications. The first essay investigates the distributional consequences of monetary policy in the context of a small open economy framework. I show that wealthy households (represented by the top ten percent of the income distribution), who are more able to save in foreign currencies, gain in purchasing power of their incomes by hedging against domestic inflation. At the same time, since the poor (represented by the bottom fifty percent of the income distribution) retain larger share of liquid assets denominated in domestic currency, consequently leading them to bear a greater burden of local currency inflation. I also show that contractionary monetary policy is associated with periods of higher income inequality in emerging markets. The second essay presents a comprehensive practical analysis of Kazakhstani city-level housing prices. The key focus is to test whether there is a single, integrated Kazakhstani housing market, and hence to examine potential long-run relationships among the seven city housing prices series for which we have monthly data during the period 2014-2017. We also explore how monetary policy shifts and subsequent exchange rate shocks could affect the system of relative prices. The results obtained suggest that city-level house prices are weakly related across cities in the long run, and the interest rate channel of monetary policy currently is surprisingly weak in Kazakhstan. The third essay discusses a relatively new take on Inflation Targeting as a single-mandate monetary policy, which effectively exposes its many disadvantages. Our discussion first introduces the issues of coordination and conflict between fiscal and monetary policies. Our empirical exercise directly addresses the unemployment outcome of inflation targeting policy compared to other monetary policy settings. Our results show that while IT actually reduced the average inflation rate prior 2008 financial crisis, it has a negative effect on the unemployment rate in the longer term. The paper argues that the aggregate unemployment rate is an optimal social welfare-maximizing goal for central banks and should be used as a natural second target in a typical emerging market economy case.
Essays On Economic Policies And Economy Of Financial Markets In Developing And Emerging Countries
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Author : Weneyam Hippolyte Balima
language : en
Publisher:
Release Date : 2017
Essays On Economic Policies And Economy Of Financial Markets In Developing And Emerging Countries written by Weneyam Hippolyte Balima and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
This thesis focuses on some critical issues of the access to international financial markets in developing and emerging market economies. The first part provides a general overview of the macroeconomic consequences of one of the most market-friendly monetary policy regime--inflation targeting--using a meta-regression analysis framework. The second part analyses government bond market risk and stability. The last part investigates the disciplining effects of government bond market participation--bond vigilantes. In Chapter 1, the results indicate that the literature of the macroeconomic effects of inflation targeting adoption is subject to publication bias. After purging the publication bias, the true effect of inflation targeting appears to be statistically and economically meaningful both on the level of inflation and the volatility of economic growth, but not statistically significant on inflation volatility or real GDP growth. Third, differences in the impact of inflation targeting found in primary studies can be explained by differences in studies characteristics including the sample characteristics, the empirical identification strategies, the choice of the control variables, inflation targeting implementation parameters, as well as the study period and some parameters related to the publication process. Chapter 2 shows that the adoption of inflation targeting regime reduces sovereign debt risk in emerging countries. However, this relative advantage of inflation targeting--compared to money or exchange rate targeting--varies systematically depending on the business cycle, the fiscal policy stance, the level of development, and the duration of countries' experience with inflation targeting. Chapter 3 shows that remittances inflows significantly reduce bond spreads, whereas development aid does not. It also highlights that the effect of remittances on spreads arises in a regimes of lower developed financial system, higher degree of trade openness, lower fiscal space, and exclusively in non-remittances dependent regimes. Chapter 4 indicates that countries with credit default swaps contracts on their debts have a higher probability of experiencing a debt crisis, compared to countries without credit default swaps contracts. It also finds that the impact of credit default swaps initiation is sensitive to several structural characteristics including the level of economic development, the country creditworthiness at the timing of credit default swaps introduction, the public sector transparency, the central bank independence; and to the duration of countries' experiences with credit default swaps transactions. Chapter 5 shows that bond markets participation encourages government in developing countries to increase their domestic tax revenue mobilization. Finally, it finds that bond markets participation improves the mobilization of internal taxes, compared to tax on international trade, and reduces their instability. Chapter 6 shows that the presence of domestic bond markets significantly reduces financial dollarization in domestic bond markets countries. This effect is larger for inflation targeting countries compared to non-inflation targeting countries, is apparent exclusively in a non-pegged exchange rate regime, and is larger when there is a fiscal rule that constrains the conduct of fiscal policy. Finally, it finds that the induced drop in inflation rate and its variability, nominal exchange rate variability, and seigniorage revenue are potential transmission mechanisms through which the presence of domestic bond markets reduces financial dollarization in domestic bond markets countries.
International Financial Intermediation
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Author : Edmar Lisboa Bacha
language : en
Publisher:
Release Date : 1982
International Financial Intermediation written by Edmar Lisboa Bacha and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1982 with Business & Economics categories.