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How Do Global Liquidity Phases Manifest Themselves in Asia?

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  • Asian Development Bank (ADB)

Abstract

Given the catastrophe in the world’s largest economy and the subsequent unprecedented ultra-easy money policies, policy makers around the world have to face a new environment. The resulting capital flows in emerging market economies were huge and volatile. These flows have been intermediated through the banking sector (Phase One), and through the capital market, especially the fast growing bond market (Phase Two). Benefits and risks arise with these flows. The risks came to the fore after some signs emerged that the quantitative-easing policy in the US may slow down or even reverse, causing a reversal of capital flows. The analysis in this monograph expands on the implications of such a trend for emerging Asia, where financial cycles are falling out of sync with business cycles, reducing the effectiveness of monetary policy and thereby requiring a separate macroprudential policy.

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  • Asian Development Bank (ADB), 2013. "How Do Global Liquidity Phases Manifest Themselves in Asia?," ADB Reports RPT136042-3, Asian Development Bank (ADB), revised 05 Nov 2013.
    • Handle: RePEc:asd:wpaper:rpt136042-3
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    References listed on IDEAS

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    Cited by:

    1. Mahjus Ekananda & Tulus Suryanto, 2021. "The Influence of Global Financial Liquidity on the Indonesian Economy: Dynamic Analysis with Threshold VAR," Economies, MDPI, vol. 9(4), pages 1-20, October.
    2. Park, Donghyun & Ramayandi, Arief & Shin, Kwanho, 2014. "Capital Flows During Quantitative Easing and Aftermath: Experiences of Asian Countries," ADB Economics Working Paper Series 409, Asian Development Bank.
    3. Matthew S. Yiu & Sahminan Sahminan, 2017. "Global Liquidity, Capital Inflows and House Prices in ASEAN Economies," International Real Estate Review, Global Social Science Institute, vol. 20(1), pages 105-126.
    4. Azis, Iwan J. & Yarcia, Damaris Lee, 2014. "How Capital Flows Affect Economy-Wide Vulnerability and Inequality: Flow-of-Funds Analysis of Selected Asian Economies," Working Papers on Regional Economic Integration 136, Asian Development Bank.
    5. Vinals, J. & Nier, E., 2014. "Collective action problems in macroprudential policy and the need for international coordination," Financial Stability Review, Banque de France, issue 18, pages 39-46, April.

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