Economics, Econometrics and Finance
3 years ago

Emerging Markets Face Financial Instability Due to Technology and Financial Shocks

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SSRN Electronic Journal
CIP Deviations in Emerging Market Economies
Sevgi Coşkun, Oyakhilome Ibhagui

Paper Summary

The article explores how technology and financial shocks impact output and interest rate parity deviations in emerging markets. When domestic output gains are due to external technology shocks, interest rate parity deviations worsen. If gains come from local technology shocks, deviations improve. Both technology and financial shocks affect interest rate parity deviations, with technology shocks leading to output gains.

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