![]() This paper circulated earlier under the title “External Shocks, Banks and Optimal Monetary Policy in an Open Economy.” Yasin Mimir completed this project while visiting the Bank for International Settlements under the Central Bank Research Fellow- ship program. ∗ We would like to thank the Editor, two anonymous referees, Leonardo Gam- bacorta, Nobuhiro Kiyotaki, Giovanni Lombardo, Hyun Song Shin, Philip Turner, the seminar participants at the Bank for International Settlements, Norges Bank, the Georgetown Center for Economic Research Biennial Conference 2015, the CBRT-BOE Joint Workshop 2015 on “The International Monetary and Financial System - Long-term Challenges, Short-term Solutions,” the 21st International Conference on Computing in Economics and Finance, the 11th World Congress of the Econometric Society, and the 47th Money, Macro and Finance Research Group Annual conference for their helpful comments and suggestions. We find that optimized interest rate rules respond to the real exchange rate, asset prices, and lending spreads. The Ramsey-optimal policy is used as a benchmark. Using the calibrated model, we investi- gate optimal, simple, and implementable interest rate rules that respond to domestic/external financial variables alongside inflation and output. We account for these empirical findings by building a New Keynesian DSGE model of a small open econ- omy with a banking sector that has access to both domestic and foreign funding. ![]() External Shocks, Banks, and Optimal Monetary Policy: A Recipe for Emerging Market Central Banks ∗ Yasin Mimir a and Enes Sunel b a Norges Bank b Sunel & Sunel Law Firm We document that the 2007–09 global financial crisis exposed emerging market economies to an adverse feedback loop of capital outflows, depreciating exchange rates, deteri- orating balance sheets, rising credit spreads, and falling real economic activity. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |