Emerging markets hit harder by US rate hikes than domestic policy – Bank of Korea paper
US rate hikes can have more of an impact on emerging markets than those by their domestic central banks, according to a working paper published by the Bank of Korea on November 14.
Authors Woon Gyu Choi, Byongju Lee, Taesu Kang and Geun-Young Kim employ a factor model, which helps them to capture the US policy stance even with rates at the zero lower bound. They study the impact of policy on a wide range of economic indicators, noting US policy delivers part of its impact via global liquidity
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