Exchange rates and monetary spillovers

Guillaume Plantin and Hyun Song Shin

No 537, BIS Working Papers from Bank for International Settlements

Abstract: When does the combination of flexible exchange rates and domestic inflation-oriented monetary policy guarantee insulation from global financial conditions? We examine a dynamic global game model of international portfolio flows where, for some combination of parameters, the unique equilibrium exhibits the observed empirical feature that currency appreciation goes hand-in-hand with lower domestic interest rates and higher credit growth. When reversed, tighter monetary conditions go hand-in-hand with capital outflows and currency depreciation.

Keywords: currency appreciation; capital flows; global games (search for similar items in EconPapers)
Pages: 43 pages
Date: 2016-01
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mon and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.bis.org/publ/work537.pdf Full PDF document (application/pdf)
http://www.bis.org/publ/work537.htm (text/html)

Related works:
Journal Article: Exchange rates and monetary spillovers (2018)
Working Paper: Exchange Rates and Monetary Spillovers (2018)
Working Paper: Exchange Rates and Monetary Spillovers (2018)
Working Paper: Exchange Rates and Monetary Spillovers (2016)
Working Paper: Exchange Rates and Monetary Spillovers (2016)
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:bis:biswps:537

Access Statistics for this paper

More papers in BIS Working Papers from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Martin Fessler ().