Liquidity build-ups may cause emerging market instability – Bundesbank paper
Bundesbank paper examines effects of advanced economies’ liquidity on emerging economies
Higher liquidity in the developed world may contribute to financial instability in emerging economies, a discussion paper published by the Deutsche Bundesbank argues.
In Global liquidity and exchange market pressure in emerging market economies, Oliver Hossfeld and Marcus Pramor conduct a panel data analysis of 32 emerging market economies from 1995 to 2015. They look at the countries’ exchange rates and a large range of indicators of liquidity.
The authors find that increases in global
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