Paper examines EM response to global liquidity shocks
Emerging markets reduce rates and increase reserves in the face of positive liquidity shock
In response to positive global liquidity shocks, emerging market economies “mainly curtail” a shock’s impact via external defences, rather than letting it spill into their real economies, International Monetary Fund research has concluded.
In their paper Global Liquidity Transmission to Emerging Market Economies and Their Policy Responses, authors Woon Gyu Choi, Taesu Kang, Geun-Young Kim and Byongju Lee attempt to understand how EMs react in times of liquidity pressure.
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