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dc.contributor.authorMimir, Yasin
dc.contributor.authorSunel, Enes
dc.date.accessioned2021-09-28T06:13:59Z
dc.date.available2021-09-28T06:13:59Z
dc.date.issued2021
dc.identifier.isbn978-82-8379-203-4
dc.identifier.issn1502-8190
dc.identifier.urihttps://hdl.handle.net/11250/2783873
dc.description.abstractWe provide a theory on how a wider foreign lending base of local-currency sovereign debt may lead to destabilising effects (the original sin redux). Bond sell-offs by foreigners induce domestic banks to fund the government, reducing the credit for investment and tightening financial conditions. Currency mismatches exacerbate the ensuing deterioration in financial sector balance sheets, which amplifies the repercussions of the initial shock by prompting private sector capital outflows and larger currency depreciations. We then explore the role of central bank government bond and firm security purchases in countervailing the ramifications of bond sell-offs. Our estimated model reflects the regularities of the representative emerging-market economy that deployed quantitative easing policies during the pandemic. It further offers an explanation to the puzzle of stable exchange-rate dynamics accompanied by a reduction in excess sovereign bond yields and larger room for conventional monetary policy easing. We conclude asset purchases should be large in size to have a persistent effect on financial conditions and are less effective when they de-anchor inflation expectations or pose risks to a consolidated government balance sheet.en_US
dc.language.isoengen_US
dc.publisherNorges Banken_US
dc.relation.ispartofseriesWorking Paper;8/2021
dc.rightsAttribution-NonCommercial-NoDerivatives 4.0 Internasjonal*
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/4.0/deed.no*
dc.subjectasset purchasesen_US
dc.subjectoriginal sin reduxen_US
dc.subjectbayesian estimationen_US
dc.subjectJEL: E62en_US
dc.subjectJEL: E63en_US
dc.subjectJEL: G21en_US
dc.titleAsset purchases as a remedy for the original sin reduxen_US
dc.typeWorking paperen_US
dc.description.versionpublishedVersionen_US
dc.subject.nsiVDP::Samfunnsvitenskap: 200::Økonomi: 210::Samfunnsøkonomi: 212en_US
dc.source.pagenumber23en_US


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Attribution-NonCommercial-NoDerivatives 4.0 Internasjonal
Med mindre annet er angitt, så er denne innførselen lisensiert som Attribution-NonCommercial-NoDerivatives 4.0 Internasjonal