Global Financial Cycles: Sectoral Transmission and Policy Responses

초록

This article explores the heterogeneous effects of global financial shocks on countries worldwide, considering the role of sectoral capital flows and each country's policy responses. We find that the output of emerging market economies (EMEs) declines more than that of advanced economies (AEs), as short-term interest rates tend to rise in EMEs but are reduced in AEs. In these results, the expenditure-switching channel due to currency depreciations is insufficient to offset the negative effects on EMEs. Furthermore, the transmission primarily occurs through bank and corporate capital flows. Imposing capital controls or increasing trade barriers can help mitigate the negative effects of global financial shocks.

키워드