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International Impacts of the Federal Reserve's Quantitative Easing Program

by Arvind Subramanian, Peterson Institute for International Economics

Prepared testimony submitted to the House Committee on Financial Services Subcommittee on Monetary Policy and Trade
January 9, 2014

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As the world's largest economy, its financial epicenter, and the issuer of the primary reserve currency, actions by the US Federal Reserve ("Fed") will inevitably affect other countries via trade and exchange rates, capital flows, and overall financial conditions. The Fed's monetary easing policies, including QE, have contributed to greater capital flows and exchange market pressures in the emerging markets (EMs). But other pull factors, notably growth in the EMs themselves, have been at least as important.

QE has generally, and on balance, had a positive impact on emerging markets (EMs) and the global economy. But in some instances they have added to pressures and volatility for EMs, complicating macroeconomic management, and the impact has depended significantly on the global macroeconomic situation as well as the situation in particular countries.


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