• Media type: E-Book; Report
  • Title: Monetary Policies of Large Industrialised Countries, Emerging Market Credit Cycles and Feedback Effects
  • Contributor: Hoffmann, Andreas [Author]; Schnabl, Gunther [Author]
  • Published: Munich: Center for Economic Studies and ifo Institute (CESifo), 2014
  • Language: English
  • Keywords: asymmetric world monetary system ; contagion ; E58 ; F44 ; F33 ; credit cycles ; financial crisis ; monetary policy ; E42
  • Origination:
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  • Description: This paper explores the link between monetary policies of large industrial countries and international credit cycles. Based on an overinvestment framework, we show that in the prevailing asymmetric world monetary system, monetary policies of large centre countries can fuel credit booms in emerging markets. We argue that the absorption of inflationary pressure by emerging markets during boom periods as well as the fear of feedback effects of crises in emerging markets encourage delayed monetary tightening in centre countries. The paper helps explain asymmetric monetary policy patterns in centre countries and why the current global low interest rate environment is likely to prevail.
  • Access State: Open Access