Revisiting the Case for International Policy Coordination

Sushant Acharya, Ozge Akinci, Julien Bengui and Bianca De Paoli ()

No 20160601, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Prompted by the U.S. financial crisis and subsequent global recession, policymakers in advanced economies slashed interest rates dramatically, hitting the zero lower bound (ZLB), and then implemented unconventional policies such as large-scale asset purchases. In emerging economies, however, the policy response was more subdued since they were less affected by the financial crisis. As a result, capital flows from advanced to emerging economies increased markedly in response to widening interest rate differentials. Some emerging economies reacted by adopting measures to slow down capital inflows, acting under the presumption that these flows were harmful. This type of policy response has reignited the debate over how to moderate international spillovers.

Keywords: UNCONVENTIONAL POLICY; CAPITAL CONTROLS; INTERNATIONAL POLICY COORDINATION; INTERNATIONAL SPILLOVERS (search for similar items in EconPapers)
JEL-codes: E5 F00 G1 (search for similar items in EconPapers)
Date: 2016-06-01
New Economics Papers: this item is included in nep-mac and nep-mon
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