Distributional Consequences of Monetary Policy in Emerging Economies: Dollarization, Domestic Inflation, and Income Divergence

2021 ◽  
Author(s):  
Zhandos Ybrayev
Keyword(s):  
Monetary Policy ◽  
Emerging Economies ◽  
Income Divergence ◽  
Distributional Consequences ◽  
Domestic Inflation

scholarly journals Monetary Policy and Inequality under Labor Market Frictions and Capital-Skill Complementarity

2021 ◽  
Vol 13 (2) ◽  
pp. 292-332
Author(s):  
Juan J. Dolado ◽  
Gergő Motyovszki ◽  
Evi Pappa
Keyword(s):  
Monetary Policy ◽  
Labor Market ◽  
Income Inequality ◽  
New Keynesian ◽  
Labor Income ◽  
Skilled Workers ◽  
Investment Demand ◽  
Multiplier Effect ◽  
Distributional Consequences ◽  
Amplification Mechanism

We provide a new channel through which monetary policy has distributional consequences at business cycle frequencies. We show that an unexpected monetary easing increases labor income inequality between high-skilled and less-skilled workers. To rationalize these findings, we build a New Keynesian DSGE model with asymmetric search-and-matching (SAM) frictions and capital-skill complementarity (CSC) in production. We show that CSC on its own introduces a dynamic demand amplification mechanism: the increase in high-skilled employment after a monetary expansion makes complementary capital more productive, encouraging a further rise in investment demand and creating a multiplier effect. SAM asymmetries magnify this channel. (JEL E32, E52, E24, E12, E25, J63)

Uncertainty about Federal Reserve Policy and its Transmission to Emerging Economies

2019 ◽  
pp. 41-65
Author(s):  
Peter Tillmann
Keyword(s):  
Monetary Policy ◽  
Emerging Economies ◽  
Federal Reserve ◽  
Policy Decision ◽  
The United States ◽  
Policy Implications ◽  
Policy Uncertainty ◽  
Transmission Channel ◽  
Data Set ◽  
Policy Transmission

It is well known that a tightening or easing of the United States’ monetary policy affects financial markets in emerging economies. This chapter argues that uncertainty about future monetary policy is a separate transmission channel. We focus on the taper tantrum episode in 2013, a period with an elevated uncertainty about monetary policy, and use a data set that contains 90,000 Twitter messages on Federal Reserve tapering. Based on this data set, we construct a new index about monetary policy uncertainty using a list of uncertainty keywords. An advantage of this index is that it reflects uncertainty about a specific policy decision. An estimated vector autoregression (VAR) shows that uncertainty shocks lead to a fall in asset prices and a depreciation of local currencies. We also discuss the policy implications of this uncertainty channel of monetary policy transmission.

Prospects for emerging economies to end-2019

2019 ◽  
Keyword(s):  
Monetary Policy ◽  
Fiscal Policy ◽  
Emerging Markets ◽  
Trade Policy ◽  
Emerging Economies ◽  
World Trade ◽  
Gdp Growth ◽  
Content Type ◽  
Us Trade Policy ◽  
Policy Shift

Subject Prospects for emerging economies to end-2019. Significance US trade policy is hardening and while the direction remains uncertain, a sustained softening seems unlikely. Monetary policy is shifting towards easing in many emerging markets (EMs) and some are expanding fiscal policy. However, the policy shift will not compensate for weaker world trade and EM GDP growth is expected to slow from 4.5% last year, already a three-year low, to closer to the 4.3% seen in 2015 or even weaker.

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