The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
We use a Global VAR model to study spillovers from the Bank of Japan's quantitative and
qualitative easing (QQE) on emerging Asia.1 Our main result is that, despite an appreciation
of their currencies vis-à-vis the yen, the impact on emerging Asia's GDP tended to be
positive and significant. Our results suggest that the positive effect of QQE on expectations,
by improving confidence, more than offset any negative exchange rate spillover due to
expenditure switching from domestic demand to Japanese goods. They also suggest that
spillovers from QQE might have worked mainly through the impact of expectations and
improved confidence, captured by increases in equity prices, rather than through balance
sheet adjustments which might have been captured by movements in the monetary base.