Hostname: page-component-586b7cd67f-t8hqh Total loading time: 0 Render date: 2024-11-27T17:41:41.962Z Has data issue: false hasContentIssue false
  • English
  • Français

WITHDRAWN - GLOBAL BANK RISK AND MONETARY POLICY IN AN EMERGING ECONOMY

Published online by Cambridge University Press:  11 November 2021

Paul Luk
Paul Luk*
Affiliation:
Hong Kong Institute for Monetary and Financial Research
*
Address correspondence to: Paul Luk, Hong Kong Institute for Monetary and Financial Research, Units 1005-1011, 10th Floor, One Pacific Place, 88 Queensway, Hong Kong. e-mail: [email protected]. Phone: +852 9785 2821. Fax: +852 2878 7006.
Get access Rights & Permissions [Opens in a new window]

Abstract

The global financial crisis was characterized by heightened financial risk in the USA, which spread to the rest of the world, including emerging economies. This paper constructs a core–periphery model with a global banking network and financial frictions. Due to a common-lender effect, when global banks lend to an emerging economy, heightened financial risk in the center depresses cross-border lending to the emerging economy, reducing real activities and exacerbating monetary policy trade-offs. As financial markets become more integrated, exchange rate flexibility becomes less welfare enhancing and active capital account policy becomes more welfare enhancing.

Type
Articles
Information
Macroeconomic Dynamics , First View , pp. 1 - 32
Copyright
© The Author(s), 2021. Published by Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)