IMF Working Papers

Exchange Market Pressure, Currency Crises, and Monetary Policy: Additional Evidence From Emerging Markets

By Evan C Tanner

January 1, 2002

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Evan C Tanner. Exchange Market Pressure, Currency Crises, and Monetary Policy: Additional Evidence From Emerging Markets, (USA: International Monetary Fund, 2002) accessed November 23, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper extends my previous work by examining the relationship between monetary policy and exchange market pressure (EMP) in 32 emerging market countries. EMP is a gauge of the severity of crises, and part of this paper specifically analyzes crisis periods. Two variables gauge the stance of monetary policy: the growth of central bank domestic credit and the interest differential (domestic versus U.S. dollar). Evidence suggests that monetary policy plays an important role in currency crises. And, in most countries the shocks to monetary policy affect EMP in the direction predicted by traditional approaches: tighter money reduces EMP.

Subject: Currency markets, Domestic credit, Econometric analysis, Exchange rate arrangements, Financial markets, Foreign exchange, Monetary base, Money, Vector autoregression

Keywords: Asia and Pacific, Brazil window, Central bank, Currency crisis, Currency markets, Domestic credit, EMP fall, EMP help, EMP shock, Exchange market pressure, Exchange rate, Exchange rate arrangements, Exchange rate crisis, Monetary aggregate, Monetary base, Monetary policy, Monetary policy decision, Monetary policy matter, Monetary policy stance, Money demand, Nominal exchange rate, Place EMP, Policy instrument, Reaction function, Reserves, Vector autoregression, Western Hemisphere, WP

Publication Details

  • Pages:

    54

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2002/014

  • Stock No:

    WPIEA0142002

  • ISBN:

    9781451843132

  • ISSN:

    1018-5941