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:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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245 0 0 |a Fiscal and Monetary Nexus in Emerging Market Economies  |b How Does Debt Matter?  |c Garima Vasishtha, Taimur Baig, Manmohan Kumar, Edda Zoli 
260 |a Washington, D.C.  |b International Monetary Fund  |c 2006 
300 |a 43 pages 
651 4 |a United States 
653 |a Fiscal stance 
653 |a Interest rates 
653 |a Public debt 
653 |a Finance 
653 |a Public finance & taxation 
653 |a Debt Management 
653 |a Fiscal Policy 
653 |a Debts, Public 
653 |a Debt 
653 |a Currency 
653 |a Fiscal policy 
653 |a Sovereign Debt 
653 |a Foreign Exchange 
653 |a Banks and Banking 
653 |a Macroeconomics 
653 |a Interest Rates: Determination, Term Structure, and Effects 
653 |a Long term interest rates 
653 |a Exchange rates 
653 |a Public Finance 
653 |a Foreign exchange 
700 1 |a Baig, Taimur 
700 1 |a Kumar, Manmohan 
700 1 |a Zoli, Edda 
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520 |a 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