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The emerging market economies in times of taper-talk and actual tapering

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  • Federico J. Diez

Abstract

The emerging market economies (EME) experienced financial distress during two recent periods, both linked to the prospect of the Federal Reserve starting to slow its asset purchases. This policy change was expected to reverse the capital flows directed to the EME. Despite this aggregate effect, a closer analysis shows that there were significant differences across the EME during the time when talk of the upcoming taper began and the period when the policy was implemented. The author makes use of the literature on currency crises to analyze the different cross-country responses and to identify a potential crisis period in the near future, defined as the next 24 months.

Suggested Citation

  • Federico J. Diez, 2014. "The emerging market economies in times of taper-talk and actual tapering," Current Policy Perspectives 14-6, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbcq:2014_006
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    References listed on IDEAS

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    More about this item

    Keywords

    emerging markets; exchange rates; currency crises;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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