Asymmetric Changes in US Monetary Policy and Procyclicality of Cross-border Capital Flows in Emerging Markets:Theoretical Logic and Policy Responses
In the past 20 years,global cross-border capital flows have shown new characteristics and risks,with the most significant manifestation being the significantly increased cyclical sensitivity of cross-border capital flows in emerging markets.Essentially,the main reason for this phenomenon is the asymmetric changes in US monetary policy,especially the role of the underlying factors driving the Federal Reserve to raise interest rates.Based on this,the article deeply analyzes the theoretical logic of the impact of asymmetric changes in US monetary policy on the pro-cyclical nature of cross-border capital flows from three dimensions:micro mechanism,macro transmission,and impact differences.In theory,at the micro level,the asymmetry of the Federal Reserve's policy objectives has led to a gradual shift in its monetary policy strategy from"rule like behavior"to a more passive"discretion",which is actually a recession avoidance preference(RAP).At the macro level,information asymmetry and the"financial ac-celerator"effect in the financial system form a negative feedback loop,amplifying financial shocks under the signal effect;However,there are differences in shocks during the transmission process due to the Fed Information Effects,market expectations,and heterogeneity in the host country.Finally,based on theoretical analysis and international experience,the article provides policy recommendations for emerging markets to respond to the sensitivity of cross-border capital flow cycles in the new situation.
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