publication . Report . Article . Other literature type . Preprint . 2004

Global Transmission of Interest Rates: Monetary Independence and Currency Regime

Jeffrey A. Frankel; Sergio L. Schmukler; Luis Serven;
Open Access
  • Published: 01 Sep 2004
  • Publisher: National Bureau of Economic Research
The authors empirically study the sensitivity of local interest rates to international interest rates and how that sensitivity is affected by a country's choice of exchange rate regime. To establish the empirical regularities, they use a reduced-form empirical approach to compute both panel and single-country estimates of interest rate sensitivity for a large sample of developing and industrial economies between 1970 and 1999. When using the full sample, they find that: 1) Interest rates are typically lower in economies with fixed exchange rates than in those with flexible exchange rates. 2) More rigid currency regimes tend to exhibit higher transmission than mo...
free text keywords: Economics and Econometrics, Finance, jel:F31, jel:F32

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