Countercyclical policies in emerging markets

Emerging market economies (EMEs) have historically faced challenges in implementing countercyclical policies. However, the policy environment has changed. This paper finds evidence that EMEs were able to conduct countercyclical monetary and fiscal policies over the past decade. Indeed, the EMEs that have leaned more heavily against the business cycle have generally used both monetary and fiscal tools to do so.

Keywords: Countercyclical monetary and fiscal policies, Taylor rule, emerging markets.

JEL classification: E30, E43, E63.