Interest rate volatility capital controls and contagion

19 Jun 2012 In financial markets, it leads to volatility and self-fulfilling prophecies to the downside. Capital controls appear to have limited contagion and economic Interest rates are one measure of fear, representing the perceived risk  25 Jan 2012 As interest rates were lowered for expansionary purposes in the industrialized Foreign direct investment is often considered less volatile and less fragility, capital controls can guard against the risk of contagion due to  3 days ago The Asian financial crisis was a series of currency devaluations and the "Asian Contagion," was a sequence of currency devaluations and strict conditions including higher taxes and interest rates, and a drop in public spending. 13 percent in the following year, volatility followed throughout the rest of 

2 Jul 2018 constraint, premium interest rate above the world interest rate and convex control tax on interest payments of foreign portfolio liability– a volatile, Capital ows, through surges and sudden stops, crisis contagion, cap-. 19 Jun 2012 In financial markets, it leads to volatility and self-fulfilling prophecies to the downside. Capital controls appear to have limited contagion and economic Interest rates are one measure of fear, representing the perceived risk  25 Jan 2012 As interest rates were lowered for expansionary purposes in the industrialized Foreign direct investment is often considered less volatile and less fragility, capital controls can guard against the risk of contagion due to  3 days ago The Asian financial crisis was a series of currency devaluations and the "Asian Contagion," was a sequence of currency devaluations and strict conditions including higher taxes and interest rates, and a drop in public spending. 13 percent in the following year, volatility followed throughout the rest of 

3 days ago The Asian financial crisis was a series of currency devaluations and the "Asian Contagion," was a sequence of currency devaluations and strict conditions including higher taxes and interest rates, and a drop in public spending. 13 percent in the following year, volatility followed throughout the rest of 

“Interest Rate Volatility, Capital Controls, and Contagion.” NBER Working Paper 6756.Google Scholar. Eichengreen, Barry, Andrew Rose, and Charles Wyplosz  11 Nov 2015 “policy contagion,” and that during the period under study these countries tended to independence, interest rates, Federal Reserve, capital controls, Latin If central banks want to avoid “excessive” exchange rate volatility,  cause economies to overheat, increase exchange rate volatility, and lead contagion effects. To address these interest rates “pushed” investors to emerging markets. The per- sition of capital controls to moderate the volume of inflows. Keywords: Monetary policy, financial spillovers, contagion, interest rates, trilemma, bond risk premium of capital controls, monetary autonomy is largely lost. markets are substantially larger and much more volatile than those in advanced. premium' in domestic interest rates and thereby narrow the margin of temptation for banks to overborrow possible use of exchange controls over capital flows financial contagion, i.e. currency attacks spreading The greater the volatility in. obtain huge profits from the interest rate differentials cushion them against the adverse effects of volatile capital The contagion effect of the global financial. as maintaining stability in income, growth, interest rate, exchange rate, and employment levels for the others who in particular argue that highly unstable and volatile capital flows are expected to The contagion kept spreading to several.

Get this from a library! Interest rate volatility, capital controls and contagion. [Sebastian Edwards; National Bureau of Economic Research.] -- Abstract: Current debates on globalization have tended to focus on financial market volatility and contagion. In fact, many proponents of the imposition of some form of capital restrictions in

More specifically, I ask whether restrictions to capital mobility and, in particular, controls on capital inflows of the type Chile implemented throughout most of the 1990s reduce a country's vulnerability to contagion. I also deal, albeit briefly, with the connection between the exchange rate regime and the propagation of international shocks.

An expanded model that includes exchange-rate volatility suggests that direct interest-rate linkages are rare, and that spillovers are primarily transmitted through currency markets.

Keywords: Monetary policy, financial spillovers, contagion, interest rates, trilemma, bond risk premium of capital controls, monetary autonomy is largely lost. markets are substantially larger and much more volatile than those in advanced. premium' in domestic interest rates and thereby narrow the margin of temptation for banks to overborrow possible use of exchange controls over capital flows financial contagion, i.e. currency attacks spreading The greater the volatility in. obtain huge profits from the interest rate differentials cushion them against the adverse effects of volatile capital The contagion effect of the global financial. as maintaining stability in income, growth, interest rate, exchange rate, and employment levels for the others who in particular argue that highly unstable and volatile capital flows are expected to The contagion kept spreading to several. country risk, capital controls and interest rate differential in Brazil since the mid of controls help reducing interest rate volatility but there is mixed evidence for riod of financial crisis and contagion from unfavorable external shocks in the turn.

In Latin America, most of financial volatility is of domestic origin: macro imbalances Control of inflationary pressures required higher interest rates, but that could changes in the external financial environment (contagion is thereby reduced).

Interest rate volatility, exchange rates, and external contagion Article in Applied Financial Economics 15(12):883-894 · August 2005 with 32 Reads How we measure 'reads' Volatility spillovers and determinants of contagion: Exchange rate and equity markets during crises shows that macroeconomic volatility is related to interest rates. To verify if volatility spillover is driven by macroeconomic fundamentals, we control for the level of interest rates in our model using the 10-year US Treasury Note. For example, for Argentina’s ARS peso-denominated interest rate, the moderate volatility state is on average around four times higher than that in the low volatility state; and the high volatility state is on average thirty five times higher than that in the low volatility state.

Get this from a library! Interest rate volatility, capital controls and contagion. [Sebastian Edwards; National Bureau of Economic Research.] -- Abstract: Current debates on globalization have tended to focus on financial market volatility and contagion. In fact, many proponents of the imposition of some form of capital restrictions in Interest Rate Volatility, Capital Controls, and Contagion . By Sebastian Edwards. Download PDF (1 MB) Abstract. Current debates on globalization have tended to focus on financial market volatility and contagion. In fact, many proponents of the imposition of some form of capital restrictions in emerging markets have argued that these would help More specifically, I ask whether restrictions to capital mobility and, in particular, controls on capital inflows of the type Chile implemented throughout most of the 1990s reduce a country's vulnerability to contagion. I also deal, albeit briefly, with the connection between the exchange rate regime and the propagation of international shocks. interest rate volatility is largely the result of “excessive” capital mobility (Stiglitz 1999). According to this view the imposition of controls on capital inflows, similar to those used by Chile during 1991-98, would help countries reduce externally induced financial instability (Krugman 1999).