Understanding the Concept of Capital Leaving Emerging Markets

In an effort to quell post-pandemic inflation, the Federal Reserve raised short-term interest rates eleven times since March 2022, with the federal funds rate now at its highest in over 20 years. Historically, such interest rate hikes—or even the suggestion of hikes—has triggered financial crises in emerging markets and developing economies. But, so far, that hasn’t happened. In this episode of the Brookings Podcast on Economic Activity, Şebnem Kalemli-Özcan and Filiz Unsal discuss their new study, which examined how improved monetary policy credibility in these countries may have improved their resilience to American financial trends.

Show notes and transcript

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