In the context that global financial shocks can severely affect emerging markets, exchange rate flexibility alone appears insufficient, prompting calls for additional tools, this research asks whether macroprudential policy measures (MPMs) can help emerging markets to cushion global financial shocks.
It addresses the following issues:
- Can MPMs buffer the effects of global financial shocks on GDP growth?
- Can MPMs enhance monetary independence?
- Can MPMs entail other side effects, such as cross-country spill-overs on other EMs?