TY  - JOUR
AU  - Edwards,Sebastian
TI  - The Federal Reserve, Emerging Markets, and Capital Controls: A High Frequency Empirical Investigation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 18557
PY  - 2012
Y2  - November 2012
UR  - http://www.nber.org/papers/w18557
L1  - http://www.nber.org/papers/w18557.pdf
N1  - Author contact info:
Sebastian Edwards
UCLA Anderson Graduate School of Business
110 Westwood Plaza, Suite C508
Box 951481
Los Angeles, CA 90095-1481
Tel: 310/206-6797
Fax: 310/206-5825
E-Mail: sebastian.edwards@anderson.ucla.edu
M2  - featured in NBER digest on 2013-04-01
AB  - In this paper I use weekly data from seven emerging nations – four in Latin America and three in Asia – to investigate the extent to which changes in Fed policy interest rates have been transmitted into domestic short term interest rates during the 2000s. The results suggest that there is indeed an interest rates “pass through” from the Fed to emerging markets. However, the extent of transmission of interest rate shocks is different – in terms of impact, steady state effect, and dynamics – in Latin America and Asia. The results also indicate that capital controls are not an effective tool for isolating emerging countries from global interest rate disturbances. Changes in the slope of the U.S. yield curve, including changes generated by a “twist” policy, affect domestic interest rates in emerging countries. I also provide a detailed case study for Chile.
ER  -