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Fiscal and Monetary Nexus in Emerging Market Economies How Does Debt Matter?

This paper examines two main aspects of the interaction between fiscal and monetary policy in emerging market economies. First, it explores the interest rate-inflation relationship in economies with different levels of external and domestic public debt using panel- and crosssection data. The results...

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Bibliographic Details
Main Author: Vasishtha, Garima
Other Authors: Baig, Taimur, Kumar, Manmohan, Zoli, Edda
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2006
Series:IMF Working Papers
Subjects:
Fiscal Stance
Interest Rates
Public Debt
Finance
Public Finance & Taxation
Currency; Foreign Exchange
Debt Management
Debts, Public
Fiscal Policy
Debt
Sovereign Debt
Foreign Exchange
Banks And Banking
Macroeconomics
Interest Rates: Determination, Term Structure, And Effects
Long Term Interest Rates
Exchange Rates
Public Finance
United States
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:This paper examines two main aspects of the interaction between fiscal and monetary policy in emerging market economies. First, it explores the interest rate-inflation relationship in economies with different levels of external and domestic public debt using panel- and crosssection data. The results show that interest rate-inflation elasticity weakens with debt/GDP and external debt/GDP. Second, it utilizes high-frequency data from Brazil, Turkey, and Poland to examine how market-determined variables react to economic news. The results suggest that when vulnerabilities are high, budget news has the most significant impact on country spreads and interest rates, and the impact of monetary policy is weakened
Physical Description:43 pages
ISBN:9781451864441

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