Please use this identifier to cite or link to this item:
Pennings, Steven
Ramayandi, Arief
Tang, Hsiao Chink
Year of Publication: 
Series/Report no.: 
ADB Working Paper Series on Regional Economic Integration 72
This paper estimates the impact of monetary policy on exchange rates and stock markets for eight small open economies: Australia, Canada, the Republic of Korea, New Zealand, the United Kingdom, Indonesia, Malaysia and Thailand. On average across these countries, a one percentage point surprise rise in official interest rates leads to a 1% appreciation of the exchange rate and a 1% fall in stock market indices. The effect on exchange rates is notably weaker in the non-Organization for Economic Cooperation and Development (OECD) countries with a managed float. For the OECD countries, there is no robust evidence of a change in the effect of policy during the global financial crisis. For the non-OECD countries, there is some evidence of a stronger effect of policy on stock markets during the crisis, although further research is needed to investigate whether this is a result of measurement issues.
Monetary policy effectiveness
exchange rate
stock prices
Asian economies
Persistent Identifier of the first edition: 
Creative Commons License:
Document Type: 
Working Paper

Files in This Item:
1.25 MB

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.