The US Monetary Policy Normalization: The Impact on Korean Financial Market and Capital Flows

2019 ◽  
Author(s):  
Tae Soo Kang ◽  
Kyunghun KIim ◽  
Hyunduk Suh
Keyword(s):  
Monetary Policy ◽  
Financial Market ◽  
Capital Flows ◽  
The Us ◽  
The Impact ◽  
Us Monetary Policy

scholarly journals External effects of US monetary policy

2018 ◽  
Vol 11 (2) ◽  
pp. 82-99
Author(s):  
M. Yu. GOLOVNIN
Keyword(s):  
Monetary Policy ◽  
Emerging Markets ◽  
Interest Rates ◽  
Capital Flows ◽  
Treasury Bills ◽  
The Us ◽  
National Economies ◽  
The Impact ◽  
Us Monetary Policy

The article focuses on the changes in US monetary policy since the  beginning of the 21st century and reveals the impact of this policy  on the national economies of other countries, especially emerging markets. The US monetary policy influenced the emerging  markets both through the real and financial channels. Through the  latter, the main impact was on the Treasury bills rates and on the  exchange rates. At the same time, the influence on different  countries varied in different periods. For example, interest rates in  Thailand, Mexico and Pakistan before the global economic and  financial crisis in general followed the cycle of US monetary policy.  The “quantitative easing” policy, the statements and the follow-up  actions to abolish it, have influenced cross-border capital flows to  emerging markets. A number of countries, including Russia,  experienced the impact of US monetary policy through the dynamics  of oil prices. Emerging markets face restrictions on their monetary  policy from the US monetary policy, but in practice they seek to  circumvent them through exchange rate regulation, restrictions on  crossborder capital flows and the pursuit of an independent monetary policy, not following the  cycles of interest rate changes in the US.

Spillover effects of the US monetary policy on the Indian trilemma

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Harpreet Singh Grewal ◽  
Pushpa Trivedi
Keyword(s):  
Monetary Policy ◽  
Event Study ◽  
Spillover Effects ◽  
Subject Area ◽  
Open Market ◽  
Content Type ◽  
Study Approach ◽  
The Us ◽  
The Impact ◽  
Us Monetary Policy

PurposeThe purpose of this paper is to investigate the impact of the US unconventional monetary policy surprises on the management of trilemma in India.Design/methodology/approachThis paper uses the event study approach along with OLS and MANOVA to examine the impact.FindingsThe results validate the existence of trilemma in India for the period from October 2008 to December 2017. The results also show that monetary policy independence still exists in India in the wake of greater spillover effects during the Federal Open Market Committee announcement days. The spillover effects on USD-INR exchange rates and capital flows are found to be statistically significant. The MANOVA results show that the trilemma in India is influenced by around 20% by the changes in the US monetary policy.Originality/valueThe above approach of event study combined with MANOVA in this subject area has not been used before to the best of the authors’ knowledge. Further, there are only a few studies that exist on the spillover effects of the US monetary policy actions on the management of trilemma in India.

scholarly journals US vs. Euro Area

2019 ◽  
Vol 19 (199) ◽  
Author(s):  
Eugenio Cerutti ◽  
Carolina Osorio Buitron
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Negative Impact ◽  
Financial Sector ◽  
Bank Lending ◽  
Real Sector ◽  
Cross Border ◽  
The Us ◽  
The Impact ◽  
Us Monetary Policy

This paper analyzes the drivers of cross-border bank lending to 49 Emerging Markets (EMs) during the period 1990Q1-2014Q4, by assessing the impact of monetary, financial and real sector shocks in both the US and the euro area. The literature has traditionally highlighted the influence of US monetary policy on driving cross-border bank flows, and more recently the importance of both US and Euro Area (EA) financial/banking sectors’ related variables. Our contribution is the simultaneous analysis of the role of these US and EA drivers, as well as their interactions with real sector shocks. We corroborate the negative impact of US monetary policy tightening on cross-border lending to EMs, but we find that EA monetary policy seems to have an impact mostly on Emerging Europe, reflecting the fact that cross-border lending to most other EM regions is dollar denominated. We also find that real sector shocks in both the US and EA trigger an increase in cross-border lending, but less in EA when modeling the financial sector. Finally, for financial sector shocks, such as those associated with a decrease in bank leverage, our results indicate a broad-based overall contraction of cross-border lending if the shock originates in the US, and heterogenous effects across borrowing regions if the shock originates in the EA.

Spillover effects of the US monetary policy normalization on African stock markets

2020 ◽  
Vol 22 (1) ◽  
pp. 3-19
Author(s):  
Ebere Kalu ◽  
Chinwe Okoyeuzu ◽  
Angela Ukemenam ◽  
Augustine Ujunwa
Keyword(s):  
Monetary Policy ◽  
Financial Market ◽  
Stock Prices ◽  
Spillover Effects ◽  
African Countries ◽  
Treasury Bill ◽  
Content Type ◽  
The Us ◽  
Economic Bloc ◽  
Us Monetary Policy

PurposeWe study the contemporaneous effects of US monetary policy normalization on African stock market using panel data from six African countries.Design/methodology/approachDaily data from May 1, 2013 to December 31, 2018 were used in order to accommodate the announcement effects since the US monetary policy normalization announcement was made in May 2013, while the rate hike was in December 2015. The study used the FE, RE and PMG models.FindingsThe results revealed that US 10-year bond yield and Treasury bill rate shocks negatively affect stock prices in Africa. S$P500 shock positively affects African stock prices.The result revealed that the integration of African financial market to the global financial market is a major source of vulnerability. The finding that US Treasury bill rate is a major depressant of the African stock prices reveals the short-termism of foreign polio inflows into African economies.Originality/valueWe provide inexorably insight into the interplay of financial systems globally. It can be useful for the purposes of generalization in developing economies in the shape of African countries. More so, this study could be replicated in another economic bloc or region with the aim of further exposing the far-reaching spillover effects of the US monetary policy normalization.

scholarly journals IMPACT OF THE FED’S UNCONVENTIONAL MONETARY POLICY ON THE US FINANCIAL MARKET

2021 ◽  
Vol 9 (3) ◽  
pp. 145-158
Author(s):  
Silvia Trifonova ◽  
◽  
Svilen Kolev ◽  
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rates ◽  
Financial Market ◽  
Unconventional Monetary Policy ◽  
The Us ◽  
Policy Measures ◽  
Us Dollar ◽  
The Exchange Rate ◽  
The Impact

This paper is devoted to the unconventional monetary policy measures implemented by the US Federal Reserve (Fed) after the global financial crisis. The objective is to conduct an empirical analysis and econometric study on the effects of the US Fed non-standard monetary policy measures on the US financial market, namely by observing the reaction on the US 10-year government bond yield, the US stock market via the S&P 500 index, and the exchange rate of the US dollar versus the euro (EUR/USD). The observed period spreads from January 2009 to March 2019, with the use of monthly data. It captures the Fed’s unconventional monetary policy measures, the first steps of the then planned gradual termination of quantitative easing (QE) and lifting of the interest rates, which was reverted in the course of 2019 and 2020. The results from the constructed vector error correction model suggest that Fed’s monetary policy stance continues to influence the changes in the bond yields, the S&P 500 index, and the value of the US dollar through the interest rate, the portfolio balance, and the exchange rate channels. The findings show that the process of normalization of the monetary policy regarding the future interest rates path in the US under the Fed’s monetary policy must be carefully guided. It must be consistent with the macroeconomic conditions and the state of the financial sector. The impact on the developed and emerging markets must be considered as well, with the main aim of avoiding potential serious risks.

scholarly journals The impact of United States monetary policy uncertainty on the Gulf Cooperation Council stock markets

2019 ◽  
Vol 16 (1) ◽  
pp. 128-143 ◽  
Author(s):  
Abdullah Saeed S Alqahtani ◽  
Hongbing Ouyang ◽  
Shayem Saleh
Keyword(s):  
Monetary Policy ◽  
Stock Markets ◽  
Structural Var ◽  
Policy Uncertainty ◽  
Gcc Countries ◽  
The Us ◽  
Portfolio Managers ◽  
Uncertainty Indices ◽  
The Impact ◽  
Us Monetary Policy

Most of the GCC countries currencies are pegged to the US dollar, which make the economy those countries susceptible to the US monetary policy change. This paper used the non-structural VAR tests to examine the spillovers impact of the two recently developed US monetary policy uncertainty indices (the BBD MPU and the HRS MPU) shocks on GCC stock markets from 2003: M01 to 2017: M07. The result revealed that during the period under review, the two MPU have slight significant impact on some GCC markets. But the HRS MPU has more impact than the BBD MPU. Besides this, unidirectional causality running from HRS MPU to Bahraini and Kuwaiti Stock market was detected within the period. Hence, policymakers should realize the heterogeneity impacts from US MPU to stock markets in GCC countries. The findings also help investors and portfolio managers to better understand the effects of US monetary policy uncertainty on the stock markets.

Is bigger more effective? shock size and the efficacy of monetary policy

2021 ◽  
pp. 1-10
Author(s):  
Toyoichiro Shirota
Keyword(s):  
Monetary Policy ◽  
Projection Method ◽  
Monetary Policy Shocks ◽  
Information Effect ◽  
Local Projection ◽  
Policy Effects ◽  
Potential Source ◽  
The Us ◽  
Policy Shocks ◽  
Us Monetary Policy

Abstract This study empirically examines whether shock size matters for the US monetary policy effects. Using a nonlinear local projection method, I find that large monetary policy shocks are less powerful than smaller monetary policy shocks, with the information effect being the potential source of the observed asymmetry in monetary policy efficacy.

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