The Effects of U.S. Unconventional Monetary Policy on Asia Frontier Developing Economies

Sohrab Rafiq

No 2015/018, IMF Working Papers from International Monetary Fund

Abstract: This paper explores the effect of U.S. unconventional monetary policy (QE2) on a group of frontier developing economies (FDEs) in Asia. This paper finds that spillovers emanating from the U.S. on FDEs in Asia have been small. The relative insulation of emerging Asia from the global financial cycle can likely be attributed to the presence of managed capital accounts coupled with shallow financial markets. Should U.S. monetary policy begin to normalize the direct first-round impact on developing Asia is likely to be small.

Keywords: WP; demand shock; fed funds rate; unconventional monetary policy; liquidity; capital flows; credit; monetary policy shock; monetary policy spillover; monetary policy independence; monetary policy innovation; FDE Asia; Asia FDE block; interest rate expectation; monetary policy in the U.S.; private sector interest rate expectation; expectations-interest rate model; Unconventional monetary policies; Short term interest rates; Yield curve; Current account balance; Asia and Pacific; Global (search for similar items in EconPapers)
Pages: 30
Date: 2015-01-23
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Citations: View citations in EconPapers (3)

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