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Hot Money Flows, Commodity Price Cycles, and Financial Repression in the US and the People's Republic of China: The Consequences of Near Zero US Interest Rates

dc.contributor.authorRonald McKinnon
dc.contributor.authorZhao Liu
dc.date.accessioned2015-01-30T14:45:54Z
dc.date.available2015-01-30T14:45:54Z
dc.date.issued2013-01-01
dc.identifier.urihttp://hdl.handle.net/11540/2082
dc.description.abstractUnder near zero United States (US) interest rates, the international dollar standard malfunctions. Emerging markets with naturally higher interest rates are swamped with ―hot money‖ inflows. Emerging market central banks intervene to prevent their currencies from rising precipitously. They subsequently lose monetary control and begin inflating. Primary commodity prices rise worldwide unless interrupted by an international banking crisis. This cyclical inflation on the dollar’s periphery only registers in the US core consumer price index (CPI) with a long lag. The zero interest rate policy also fails to stimulate the US economy as domestic financial intermediation by banks and money market mutual funds is repressed. Because the People’s Republic of China (PRC) is forced to keep its interest rates below market-clearing levels, it also suffers from ―financial repression,‖ although in a form differing from that in the US.
dc.languageEnglish
dc.publisherAsian Development Bank
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.titleHot Money Flows, Commodity Price Cycles, and Financial Repression in the US and the People's Republic of China: The Consequences of Near Zero US Interest Rates
dc.typeWorking Papers
dc.subject.expertFinancial Stability
dc.subject.expertFinancial Management System
dc.subject.expertFinancial Restructuring
dc.subject.expertCapital Market Development
dc.subject.expertErosion
dc.subject.expertMarket Development
dc.subject.expertEconomics
dc.subject.expertErosion
dc.subject.expertInternational Economics
dc.subject.adbInternational Financial Market
dc.subject.adbMultilateral Financial Institutions
dc.subject.adbEconomic Recession
dc.subject.adbMarket
dc.subject.adbCrisis
dc.subject.naturalBusiness recessions
dc.subject.naturalMultilateral development banks
dc.subject.naturalRegulatory reform
dc.subject.naturalCapital
dc.title.seriesRegional Economic Integration Working Papers
dc.title.volumeno 107
dc.contributor.imprintAsian Development Bank
oar.themeFinance
oar.themeEconomics
oar.adminregionEast Asia Region
oar.countryChina, People's Republic of
oar.identifierOAR-001585
oar.authorMcKinnon, Ronald
oar.authorLiu, Zhao
oar.importtrue
oar.googlescholar.linkpresenttrue


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