The Role of Interest Rates in Business Cycle Fluctuations in Emerging Market Countries: The Case of Thailand

WPIEA2006110 Image
Price:  $15.00

Author/Editor: Ivan Tchakarov, Selim Elekdag
Release Date: © May, 2006
ISBN : 978-1-45186-370-3
Stock #: WPIEA2006110
English
Stock Status: Available

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Description

Emerging market countries have enjoyed an exceptionally favorable economic environment throughout 2004, 2005, and early 2006. In particular, accommodative U.S. monetary policy in recent years has helped create an environment of low interest rates in international capital markets. However, if world interest rates were to take a sudden upward course, this would lead to less hospitable financing conditions for emerging market countries. The purpose of this paper is to measure the effects of world interest rate shocks on real activity in Thailand. The analysis incorporates balance sheet related credit market frictions into the IMF’s Global Economy Model (GEM) and finds that Thailand would best minimize the adverse effects of rising world interest rates if it were to follow a flexible exchange rate regime.

Taxonomy

Business cycles , Economic development , International trade




More publications in this series: Working Papers


More publications by: Ivan Tchakarov ; Selim Elekdag