Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/228217
Authors: 
Coman, Andra
Lloyd, Simon P.
Year of Publication: 
2019
Series/Report no.: 
ECB Working Paper No. 2339
Abstract: 
We examine whether emerging market prudential policies help to reduce the macrofinancial spillover effects of US monetary policy. We find that emerging markets with tighter prudential policies face significantly smaller, and less negative, spillovers to total credit from US monetary policy tightening shocks. Loan-to-value ratio limits and reserve requirements appear to be particularly effective prudential measures at mitigating the spillover effects of US monetary policy. Our findings indicate that domestic prudential policies can dampen emerging markets' exposure to US monetary policy and the associated global financial cycle, even when accounting for capital controls, suggesting they may be a useful tool in the face of international macroeconomic policy trade-offs.
Subjects: 
International spillovers
Local projections
Policy Interactions
Monetary policy
Prudential policy
JEL: 
E52
E58
E61
F44
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-3908-9
Document Type: 
Working Paper

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