Document Type
Article
JEL Codes
E44, E52, E58, F31, F32, F62
Abstract
Since the Global Financial Crisis, non-reserve-issuing economies (NREs) have been highly sensitive to episodes of external pressures. With monetary policy independence constrained by this sensitivity, many NREs have utilized other policy instruments. This paper confirms the vulnerability of NREs to external shocks and finds that, in some circumstances, managing such shocks with multiple instruments can both lessen the policy response required from any one policy tool to financial and external shocks and increase the effectiveness of policies in stabilizing macrofinancial conditions. Effectiveness, however, does not always imply appropriateness, which rests on an evaluation of potential trade-offs and unintended consequences.
Recommended Citation
Poirson, Hélène; Porter, Nathan; Fayad, Ghada; Agur, Itai; Bi, Ran; Chen, Jiaqian; Eugster, Johannes; Laseen, Stefan; Menkulasi, Jeta; Moriyama, Kenji; Rochon, Céline; Svirydzenka, Katsiaryna; Tovar, Camilo; Zhang, Zhongxia; and Zdzienicka, Aleksandra
(2022)
"Managing External Volatility: Policy Frameworks in Non-Reserve-Issuing Economies,"
Journal of Financial Crises: Vol. 4
:
Iss. 3, 60-98.
Available at:
https://elischolar.library.yale.edu/journal-of-financial-crises/vol4/iss3/2
Date Revised
2022-09-23
Included in
Economic Policy Commons, Finance and Financial Management Commons, Macroeconomics Commons, Policy History, Theory, and Methods Commons, Public Administration Commons