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Federal Reserve Bank of Boston
Current Policy Perspectives
The emerging market economies in times of taper-talk and actual tapering
Federico J. Diez
Abstract

The emerging market economies (EME) experienced financial distress during two recent periods, both linked to the prospect of the Federal Reserve starting to slow its asset purchases. This policy change was expected to reverse the capital flows directed to the EME. Despite this aggregate effect, a closer analysis shows that there were significant differences across the EME during the time when talk of the upcoming taper began and the period when the policy was implemented. The author makes use of the literature on currency crises to analyze the different cross-country responses and to identify a potential crisis period in the near future, defined as the next 24 months.


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Federico J. Diez, The emerging market economies in times of taper-talk and actual tapering, Federal Reserve Bank of Boston, Current Policy Perspectives 14-6, 14 Nov 2014.
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Keywords: currency crises; exchange rates; emerging markets
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