Economics, Econometrics and Finance
4 years ago

Monetary policy easing leads to currency depreciation, changing global financial landscape.

1 view
EAER International Conference Proceedings
The Effects of Conventional and Unconventional Monetary Policy on Exchange Rates
Barbara Rossi

Paper Summary

The effects of monetary policy on exchange rates were studied. Both conventional and unconventional monetary policy easing led to a country's currency depreciation. The impact of monetary policy shocks varied over time and depended on how they influenced expectations. The overshooting hypothesis was supported, and changes in expected real interest rates played a crucial role in transmitting monetary policy shocks.

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