EconPapers    
Economics at your fingertips  
 

Capital Flows During Quantitative Easing: Experiences of Developing Countries

Donghyun Park (), Arief Ramayand and Kwanho Shin ()
Authors registered in the RePEc Author Service: Arief Ramayandi ()

Emerging Markets Finance and Trade, 2016, vol. 52, issue 4, 886-903

Abstract: A potentially important side effect of quantitative easing (QE) by the United States Federal Reserve was the expansion of capital flows into developing countries. As a result, there were widespread concerns that reversing QE might trigger financial instability in those countries. The central objective of our article is to empirically investigate this important issue by (1) examining the effect of QE on capital flows into developing Asia and (2) identifying the most significant factors that influence the effect of a QE taper tantrum on exchange rate instability. We find that capital flows into developing countries during QE were at least comparable to those before the global financial crisis. We also find that capital flows during QE and the symptoms of those capital flows such as high inflation, credit expansion, and the deterioration of the current-account balance accounted for much of the destabilizing effect of a QE taper tantrum. While there is no evidence that macroprudential policies directly reduce the destabilizing effect, they can nevertheless be useful preemptive measures.

Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1080/1540496X.2015.1103136 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:52:y:2016:i:4:p:886-903

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

 
Page updated 2019-11-06
Handle: RePEc:mes:emfitr:v:52:y:2016:i:4:p:886-903