Caceres, Carlos
[VerfasserIn]
;
Carriere-Swallow, Yan
[Sonstige Person, Familie und Körperschaft];
Gruss, Bertrand
[Sonstige Person, Familie und Körperschaft]
Global Financial Conditions and Monetary Policy Autonomy
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 2016 erstellt
Beschreibung:
Is the Mundell-Fleming trilemma alive and well? International co-movement of asset prices takes place along side synchronized business cycles, complicating the identification of financial spillovers and assessments of monetary policy autonomy. A benchmark for interest rate co-movement is to impose the null hypothesis that central banks respond only to the outlook for domestic inflation and output. We show that common approaches used to estimate interest rate spillovers tend to understate the degree of monetary autonomy enjoyed by small open economies with flexible exchange rates. We propose an empirical strategy that partials out those spillovers that are associated with impaired monetary autonomy. Using this approach, we revisit the predictions of the trilemma and find more compelling evidence that flexible exchange rates deliver monetary autonomy than prior work has suggested