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Monetary policy options for mitigating the impact of the global financial crisis on emerging market economies

Marek Dąbrowski, Sławomir Śmiech () and Monika Papież ()

MPRA Paper from University Library of Munich, Germany

Abstract: Though the hypothesis that exchange rate regimes fully predetermine monetary policy in the face of external shocks hardly finds any advocates on theoretical ground it has crept in the most of empirical research. This study adopts a more discerning empirical approach that looks at monetary policy tools used in order to accommodate the recent financial crisis. We investigated the GDP growth in 45 emerging market economies in the most intense phase of the crisis and found out that there is no clear difference in the growth performance between countries at the opposite poles of the exchange rate regime spectrum. Depreciation cum international reserve depletion outperforms the other policy options, especially the rise in the interest rate spread. We discovered certain complementarities between the information on the policy option and on exchange rate regime. Taking into account non-Gaussian settings, we decided to use quantile regression, which provide in addition, more complete picture of relationship between the covariates and the distribution of the GDP growth.

Keywords: Global financial crisis; Emerging market economies; Monetary policy; Exchange rate regime; Quantile regressions (search for similar items in EconPapers)
JEL-codes: C21 E52 F31 F41 (search for similar items in EconPapers)
Date: 2013-02-24
New Economics Papers: this item is included in nep-cba, nep-fdg, nep-mac, nep-mon and nep-opm
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Journal Article: Monetary policy options for mitigating the impact of the global financial crisis on emerging market economies (2015) Downloads
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