Mr. Luis Brandao-Marques, Mr. R. G Gelos, Mr. Thomas Harjes, Ms. Ratna Sahay, and Yi Xue
Central banks in emerging and developing economies (EMDEs) have been modernizing their monetary policy frameworks, often moving toward inflation targeting (IT). However, questions regarding the strength of monetary policy transmission from interest rates to inflation and output have often stalled progress. We conduct a novel empirical analysis using Jordà’s (2005) approach for 40 EMDEs to shed a light on monetary transmission in these countries. We find that interest rate hikes reduce output growth and inflation, once we explicitly account for the behavior of the exchange rate. Having a modern monetary policy framework—adopting IT and independent and transparent central banks—matters more for monetary transmission than financial development.
Mr. Eduard H. Brau, R. C. Williams, Mr. Peter M Keller, and Mr. M. Nowak
Experience with multilateral debt restructurings with official creditors and with international banks in the second half of the 1970s was described in External Indebtedness of Developing Countries, issued in 1981. The present paper reviews recent developments, covering the period through early October 1983.