Comments on "The global impact of risk-off shocks"
Piti Disyatat ()
A chapter in Asia-Pacific fixed income markets: evolving structure, participation and pricing, 2019, vol. 102, pp 25-28 from Bank for International Settlements
In this paper, Caballero and Kamber study how monetary policy frameworks influence the impact of risk-off shocks for a broad set of advanced market economies (AEs) and emerging market economies (EMEs). It is a very interesting and thought provoking paper. The key propositions of the paper are: (i) risk-off shocks have become more benign post-Great Financial Crisis for EMEs; (ii) this is attributable to unconventional US policies (so-called policy-put frameworks); and (iii) stronger country fundamentals imply more resilience to risk-off shocks. The overall conclusion is that policy easing in the United States, particularly unconventional ones, has been good for all. This is a good story. But is it too good to be true?
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Persistent link: https://EconPapers.repec.org/RePEc:bis:bisbpc:102-04
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