Monetary Policies of Large Industrialised Countries, Emerging Market Credit Cycles and Feedback Effects

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 4723

Classification and Topics

• Classification: Wirtschaft ; Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems ; Central Banks and Their Policies ; International Monetary Arrangements and Institutions ; International Business Cycles
• Subject: asymmetric world monetary system ; credit cycles ; monetary policy ; financial crisis ; contagion

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hoffmann, Andreas ; Schnabl, Gunther
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/96848
• Last update: 10.03.2025, 11:44 AM CET