Monetary policy options for mitigating the impact of the global financial crisis on emerging market economies

摘要

Though the hypothesis that exchange rate regimes fully predetermine monetary policy in the face of external shocks hardly finds any advocates in the field of theory, it has crept into empirical research. This study adopts a careful and rigorous empirical approach that looks at monetary policy options used in order to accommodate the global financial crisis. We examine the GDP growth in 41 emerging market economies in the most intense phase of the crisis and confirm that there is no clear difference in the growth performance between countries at the opposite poles of the exchange rate regime spectrum. Moreover, we find that the monetary policy option of depreciation cum international reserves depletion outperforms other options, especially the rise in the interest rate spread. We also discover certain complementarities between information on policy option and on exchange rate regime. We use quantile regression, which provides a more complete picture of the relationships between the covariates and the distribution of the GDP growth.