| By: |
Patnaik , Ila (National Institute of Public Finance and Policy);
Pundit, Madhavi (Asian Development Bank) |
| Abstract: |
The taper tantrum episode induced a sudden outflow of capital from emerging
markets back to the United States. This paper analyzes exchange market
pressure in 93 developing and emerging market economies during this episode,
drawing on recent methodological improvements in measuring exchange market
pressure. We find that all economies in the sample that were integrated with
global capital markets were heavily hit. Although popular discourse suggested
that the extent of an economy’s fragility depended on its macroeconomic
fundamentals, we find these fundamentals did not have much of a role in
determining the level of pressure on a currency. |
| Keywords: |
capital flows; exchange market pressure; financial shock; international trade and finance; macroeconomics; taper tantrum |
| JEL: |
E52 F31 F32 |
| Date: |
2019–05–15 |
| URL: |
http://d.repec.org/n?u=RePEc:ris:adbewp:0581&r=all |