Emerging market economies (EMEs) can dampen the effects of shocks emanating from US monetary policy if they implement tighter prudential policies, new research published by the Bank of England finds.
Andra Coman of the European Central Bank and Simon Lloyd of the BoE study spillovers from US policy-making in 64 countries, including 29 EMEs. They compare the impact of exogenous policy shocks against micro- and macro-prudential instruments in use in each country.
The effectiveness of prudential
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