중남미

We analyse the effects of countercyclical liquidity requirements, via reserve requirements (RRs) – i.e., higher (lower) requirements in booms (busts). RRs serve a monetary and a prudential policy purpose. In emerging market economies, local monetary policies through setting interest rates may be ineffective at times, as e.g. higher (lower) policy rates may lead to capital inflows (outflows), thereby exacerbating local credit booms (busts). Not surprisingly, many emerging countries use RRs countercyclically.