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    International Spillovers of Monetary Policy: US Federal Reserve’s Quantitative Easing and Bank of Japan’s Quantitative and Qualitative Easing

    Kawai, Masahiro | January 2015
    Abstract
    This paper assesses the impact of unconventional United States (US) and Japanese monetary policies on emerging economies, and explores policy coordination issues to promote macroeconomic and financial stability in developed and emerging economies. The paper first considers a theoretical framework that allows us to analyze the impact of one country’s monetary policy on other economies. There are two important theoretical predictions. One is that the greater the positive impact of monetary policy easing on a country’s real output, the less its beggar-thy-neighbor impact on other countries. The other is that news on future changes in monetary policy can affect exchange rates and stock prices today as financial markets are inherently forward looking. The paper then examines the impact of the US Fed’s QE policy on emerging economies, including the introduction of QE, the expectation of its tapering, and the anticipation of an eventual hike in the interest rate. It also discusses the implications of “Abenomics,” particularly qualitative and quantitative easing (QQE) by the Bank of Japan (BOJ), for Asian emerging economies. It finds that the impact of BOJ QQE has been positive and, in contrast to US QE1, has not created negative consequences for emerging economies. The paper finally explores policy implications for both developed and emerging economies and suggests policies to be adopted at the country, regional and global levels, emphasizing the importance of communication among central banks and with the market and the need to strengthen global financial safety nets.
    Citation
    Kawai, Masahiro. 2015. International Spillovers of Monetary Policy: US Federal Reserve’s Quantitative Easing and Bank of Japan’s Quantitative and Qualitative Easing. © Asian Development Bank Institute. http://hdl.handle.net/11540/9630.
    Keywords
    Financial Stability
    Financial Management System
    Financial Restructuring
    Capital Market Development
    Market Development
    Economics
    Erosion
    International Economics
    Macroeconomic
    Macroeconomic Analysis
    Performance Evaluation
    Impact Evaluation
    Foreign and Domestic Financing
    Foreign Direct Investment
    International Financial Market
    Multilateral Financial Institutions
    Economic Recession
    Market
    Crisis
    Economic indicators
    Growth models
    Gross domestic product
    Macroeconomics
    Economic forecast
    Business Financing
    Investment Requirements
    Labor policy
    Manpower policy
    Business recessions
    Multilateral development banks
    Regulatory reform
    Capital
    Exports
    Economic development projects
    Economic policy
    Economic forecasting
    Investment Requirements
    Banks
    International banks and banking
    Capital movements
    Central banks and banking
    Bills of exchange
    Swaps
    Banks and banking
    Financial crisis
    Credit control
    Credit allocation
    Capital market
    International liquidity
    Liquidity
    Show allCollapse
    Citable URI
    http://hdl.handle.net/11540/9630
    Metadata
    Show full item record
    Thumbnail
    adbi-wp512.pdf (608.9Kb)
    Author
    Kawai, Masahiro
    Theme
    Finance
    Economics

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    Copyright 2016-2020 Asian Development Bank Institute, except as explicitly marked otherwise