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Does Monetary Policy in Advanced Economies Have Differentiated Effects on Portfolio Flows to Emerging Economies?

Hernández Vega Marco A.

No 2018-26, Working Papers from Banco de México

Abstract: This work analyzes whether monetary policy in advanced economies has differentiated effects on portfolio flows towards emerging economies coming from the US, the Euro Area and the UK. The results show the following: First, portfolio flows' response to US monetary policy events is vastly homogeneous across regions, whilst the reaction to Euro Area or UK polices are more diverse. Second, US policies have a bigger effect on portfolio flows from each of the selected advanced economies. Third, the magnitude of investors' responses is stronger towards Emerging Europe and Latin America than to Emerging Asia. These results could be useful for policymakers in emerging economies as a benchmark to anticipate differentiated effects in portfolio flows caused by monetary policy in advanced economies.

Keywords: Emerging Markets; Foreign Portfolio Investment; Monetary Policy Announcements (search for similar items in EconPapers)
JEL-codes: E52 F21 F62 G10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Date: 2018-12
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Persistent link: https://EconPapers.repec.org/RePEc:bdm:wpaper:2018-26

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