COVID-19 and Monetary policy with zero bounds: A cross-country investigation

Hakan Yilmazkuday

Finance Research Letters, 2022, vol. 44, issue C

Abstract: Using daily data on policy rates from 28 advanced economies and 32 emerging markets, this paper investigates the monetary policy reaction function of central banks during the Coronavirus Disease 2019 (COVID-19) outbreak. The results show that emerging markets or countries without a zero bound on their interest rates were able to reduce interest rates as a reaction to reduced economic activity and to the volatility in their exchange rates, whereas advanced economies or countries with a zero bound on their interest rates were not. Several policy implications follow for countries with a zero bound on their interest rates amid COVID-19.

Keywords: COVID-19; Coronavirus; Monetary policy; Reaction function; Google mobility; Exchange rate (search for similar items in EconPapers)
JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (6)

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Working Paper: COVID-19 and Monetary Policy with Zero Bounds: A Cross-Country Investigation (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:44:y:2022:i:c:s1544612321001847

DOI: 10.1016/j.frl.2021.102103

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