The effects of Monetary Policy on Capital Flows: A Meta-Analysis

Villamizar‐Villegas, Mauricio; Arango-Lozano, Lucía; Castelblanco, Geraldine; Fajardo-Baquero, Nicolás; Ruiz-Sanchez, Maria A.

doi:10.32468/be.1204

Cited by 3 publications

(2 citation statements)

References 46 publications

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“…This value is consistent with the reduced‐form estimates reported by Villamizar‐Villegas et al . (2022) for some of the studies included in their meta‐analysis, corresponding to a positive 100‐basis‐point increase in the domestic policy rate in a group of (mostly middle‐income) recipient countries.…”

Section: Parametrizationmentioning

confidence: 99%

Global banking, financial spillovers and macroprudential policy coordination

2023

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The transmission of financial shocks and the gains from international macroprudential policy coordination are studied in a two‐region, core–periphery model with a global bank, a two‐level financial structure and imperfect financial integration. The model replicates the stylized facts associated with global banking shocks, with respect to output, credit, house prices and real exchange rate fluctuations in recipient countries, as documented empirically. Numerical experiments, based on a parametrized version of the model, show that the gains from coordination increase with the degree of financial integration, which raises the scope for spillback effects from the periphery to the core, through trade and private capital flows. However, even when coordination is Pareto‐improving, the resulting gains may be highly asymmetric across regions.

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Section: Parametrizationmentioning

confidence: 99%

Global banking, financial spillovers and macroprudential policy coordination

2023

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“…Meanwhile, emerging market economies have significantly higher capital flows than developed market economies due to the Federal Reserve's interest rate hike. [6] In addition, different types of capital flows will cause different outcomes. Bank flows have the deepest response to monetary policy, while foreign direct investment flows have the smallest response (Villamizar et al) [7].…”

Section: Literature Reviewmentioning

confidence: 99%

What a Federal Reserve Hikes Interest Rates Effect Bond Price and the Enlightenment to Investors

Cai

2023

HBEM

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In recent years, the Federal Reserve's series of interest rate hikes have wielded a profound influence over the intricate workings of financial markets. This article offers a succinct yet comprehensive analysis, beginning with a succinct summary of the repercussions of the increase in the Federal Reserve's interest rates affects both stock market liquidity and the bond market. This paper constructs a ARIMA model to estimate the data which not effected by Federal reserve interest rate hikes. The constructed ARIMA model not only elucidates the direct impact of these monetary policy adjustments on bond prices but also encapsulates the temporal dynamics at play. Through a meticulous examination of various time intervals, the model captures the distinct nuances of monetary policy's influence, reflecting its inherent lag and the intricate interplay with market responses. They extend to investors and policymakers, offering a practical guide for optimizing investment portfolios and shaping effective monetary strategies. As investors navigate the ever-fluctuating financial landscape, a nuanced understanding of the temporal dynamics can aid in crafting informed investment decisions. Policymakers, too, stand to benefit from these insights, as they can harness the model's revelations to formulate timely and precise monetary policies that align with the intricate pulse of the market.

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Can Central Bank Credibility Improve Monetary Policy? A Meta-Analysis

Cepeda,

Taboada-Arango,

Villamizar-Villegas

2023

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We bring together the largest meta-analysis ever conducted in the macroeconomic literature to investigate the effects of central bank credibility on monetary policy. With nearly 1,200 surveyed effects, we first confirm that: (i) conventional policy significantly affects inflation and output, and (ii) unconventional policy significantly affects capital flows and the exchange rate. We next evaluate if different measures of credibility amplify these effects. Our findings indicate that central bank transparency has the largest payoff, as it increases policy effectiveness by 69% when dealing with foreign exchange intervention, by 59% when dealing with capital inflows, and by 14% when dealing with conventional policy. An alternative measure, medium and long-term anchoring in inflation expectations, is the runner up, increasing effectiveness by 31%, 9%, and 10%, respectively. Other measures, such as central bank independence and short-term anchoring in inflation expectations have lower and in some cases null effects.

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The effects of Monetary Policy on Capital Flows: A Meta-Analysis

Cited by 3 publications

References 46 publications

Global banking, financial spillovers and macroprudential policy coordination

Global banking, financial spillovers and macroprudential policy coordination

What a Federal Reserve Hikes Interest Rates Effect Bond Price and the Enlightenment to Investors

Can Central Bank Credibility Improve Monetary Policy? A Meta-Analysis

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