Spillover Effects of Quantitative Easing on Emerging-Market Economies

Robert Lavigne, Subrata Sarker and Garima Vasishtha

Bank of Canada Review, 2014, vol. 2014, issue Autumn, 23-33

Abstract: While quantitative easing (QE) in the United States likely increased capital flows to emerging-market economies (EMEs), putting upward pressure on asset prices and exchange rates, diverging fundamentals between advanced economies and EMEs were also important drivers. Evidence suggests that the benefits of QE to EMEs, in higher global demand and increased confidence, appear to outweigh the costs. When advanced economies begin to normalize monetary policy, the best defence for EMEs against any potential instability is likely to be further strengthening of their macroeconomic and financial policy frameworks.

Date: 2014
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