External shocks play a big role in causing ups and downs in emerging markets. When the U.S. changes its monetary policy, it has a quick and strong impact on interest rates and exchange rates in these markets. Prices and real output in emerging markets react more to U.S. monetary policy changes than in the U.S. itself. This shows that what happens in the U.S. can affect emerging markets a lot. However, U.S. monetary policy changes are not the most important factor for emerging markets compared to other external shocks.