Legal

The Impact Of Monetary Policy On Financial Markets In Small Open Economies: More Or Less Effective During The Global Financial Crisis?

Download Now Free registration required

Executive Summary

This paper estimates the impact of monetary policy on exchange rates and stock markets for eight small open economies: Australia, Canada, the Republic of Korea, New Zealand, the United Kingdom, Indonesia, Malaysia and Thailand. On average across these countries, a one percentage point surprise rise in official interest rates leads to a 1% appreciation of the exchange rate and a 1% fall in stock market indices. The effect on exchange rates is notably weaker in the non-Organization for Economic Cooperation and Development (OECD) countries with a managed float.

  • Format: PDF
  • Size: 1168.2 KB