Asia's Economies Vulnerable to Global Shocks, Policies Offer Limited Protection
Asian economies are affected by global financial shocks. Policies like interest rates and foreign exchange interventions can help lessen the impact. Financial shocks have a bigger effect than real shocks. For emerging economies, capital flows are a key channel for transmitting shocks, while credit is important for advanced economies. Foreign exchange interventions can help reduce the impact of financial shocks in the short term.