Credible Emerging Market Central Banks Could Embrace Quantitative Easing to Fight COVID-19

CEPR Policy Portal 2020

6 Pages Posted: 7 Jul 2020

See all articles by Gianluca Benigno

Gianluca Benigno

London School of Economics & Political Science (LSE) - Department of Economics; Federal Reserve Bank of New York

Jonathan Hartley

Harvard University, Harvard Kennedy School (HKS), Students

Alicia García-Herrero

Bruegel; Hong Kong University of Science & Technology (HKUST) - HKUST Institute for Emerging Market Studies (IEMS); Natixis

Alessandro Rebucci

Johns Hopkins University - Carey Business School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Elina Ribakova

Institute of International Finance

Multiple version iconThere are 2 versions of this paper

Date Written: June 29, 2020

Abstract

Emerging economies are fighting COVID-19 and the economic sudden stop imposed by the containment and lockdown policies, in the same way as advanced economies. However, emerging markets also face large and rapid capital outflows as a result of the pandemic. This column argues that credible emerging market central banks could rely on purchases of local currency government bonds to support the needed health and welfare expenditures and fiscal stimulus. In countries with flexible exchange rate regimes and well-anchored inflation expectations, such quantitative easing would help ease financial conditions, while minimising the risks of large depreciations and spiralling inflation.

Suggested Citation

Benigno, Gianluca and Hartley, Jonathan and Garcia-Herrero, Alicia and Rebucci, Alessandro and Ribakova, Elina, Credible Emerging Market Central Banks Could Embrace Quantitative Easing to Fight COVID-19 (June 29, 2020). CEPR Policy Portal 2020, Available at SSRN: https://ssrn.com/abstract=3644758

Gianluca Benigno

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 7807 (Phone)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Jonathan Hartley

Harvard University, Harvard Kennedy School (HKS), Students ( email )

Cambridge, MA
United States

Alicia Garcia-Herrero (Contact Author)

Bruegel ( email )

Rue de la Charité 33
B-1210 Brussels Belgium, 1210
Belgium

Hong Kong University of Science & Technology (HKUST) - HKUST Institute for Emerging Market Studies (IEMS) ( email )

IAS 2019, Lo Ka Chung Building,
Lee Shau Kee Campus, HKUST
Clear Water Bay, Kowloon
Hong Kong

Natixis ( email )

France

Alessandro Rebucci

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

HOME PAGE: http://carey.jhu.edu/faculty-research/faculty-directory/alessandro-rebucci-phd

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Elina Ribakova

Institute of International Finance ( email )

1333 H Street, NW
Suite 800E
Washington, DC 20005-4770
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
106
Abstract Views
330
rank
267,174
PlumX Metrics