Are Rising U.S. Interest Rates Destabilizing for Emerging Market Economies?
Keyword(s):
Rising U.S. interest rates are often thought to be bad news for emerging market economies (EMEs) as they increase debt burdens, trigger capital outflows, and generally cause a tightening of financial conditions that can lead to financial crises. Indeed, as shown in Figure 1 below, the rise in the federal funds rate (the black line) during the Volcker disinflation of the early 1980s was associated with a sharp rise in the incidence of financial crises in EMEs (the green bars).
1998 ◽
Vol 12
(1)
◽
pp. 5-22
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Keyword(s):
2018 ◽
Vol 54
(3)
◽
pp. 489-490