The Impact of Post-GFC Monetary Policy in the US on Capital Flows to the SEACEN Economies

Juhro, Solikin M. and Anglingkusumo, Reza (2021): The Impact of Post-GFC Monetary Policy in the US on Capital Flows to the SEACEN Economies.

Abstract

This paper examines the impact of unconventional monetary policy (UMP) in the US after the global financial crisis (GFC), represented by the expansion and contraction of the US Federal Reserve balance sheet, on capital inflows to SEACEN economies. The empirical results from panel data analysis of nine countries, namely Hong Kong SAR, India, Indonesia, Malaysia, Philippines, Singapore, Thailand, People Republic of China, and the Republic of Korea, since 2004 to 2018 point to the importance of portfolio inflows in transmitting the spill-over effects of the UMP / QE in core AEs, particularly in the US, on the SEACEN economies in the sample. The findings imply that SEACEN’s real economy and financial system are prone to elevated risks that accompany global portfolio rebalancing, thus lead to a strong merit in strengthening the cooperation framework within SEACEN, as a platform for regional sharing of policy experiences in dealing with capital flow volatility.

• Item Type: MPRA Paper
• Language: English
• Keywords: Capital inflows; unconventional monetary policy; monetary policy trilemma
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies

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