Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96848
Authors: 
Hoffmann, Andreas
Schnabl, Gunther
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 4723
Abstract: 
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.
Subjects: 
asymmetric world monetary system
credit cycles
monetary policy
financial crisis
contagion
JEL: 
E42
E58
F33
F44
Document Type: 
Working Paper

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