Caught in the Crosswinds: The Experiences of Selected Economies Responding to External Volatility with Multiple Policy Levers

23 Pages Posted: 5 Jan 2021

See all articles by Ghada Fayad

Ghada Fayad

International Monetary Fund (IMF)

Hélène Poirson

International Monetary Fund (IMF) - Research Department

Date Written: November 2020

Abstract

A case study approach is used to assess the multi-pronged policy response of seven small financially open economies with flexible exchange rate regimes to external shocks following the global financial crisis. FX intervention was frequently used- including during outflow episodes to prevent disorderly depreciation and preserve financial stability. Monetary policy often considered both financial and external stability. Capital flow management measures were sometimes calibrated symmetrically over the cycle while macroprudential measures were mostly deployed during inflow episodes. Assessment of the macroeconomic conditions paints an inconclusive picture on the benefits or costs of such policies, suggesting the need for further analysis.

JEL Classification: F21, F32, E52, G28, E31, F31, G18, E22, E43

Suggested Citation

Fayad, Ghada and Poirson Ward, Helene, Caught in the Crosswinds: The Experiences of Selected Economies Responding to External Volatility with Multiple Policy Levers (November 2020). IMF Working Paper No. 20/225, Available at SSRN: https://ssrn.com/abstract=3758058

Ghada Fayad (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Helene Poirson Ward

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
15
Abstract Views
96
PlumX Metrics