Paris_Fed_hikes

So why not? Şebnem Kalemli-Özcan of the University of Maryland is one of the authors of a new paper that explains why this time it's different. [...] What did the Fed do at this time to cause this tantrum? Şebnem Kalemli-Özcan [00:01:18]: So in May 2013, Tim, Ben Bernanke, the chair of Federal Reserve that time, made a speech, and the speech wasn't about hiking the interest rates or Fed monetary policy, it was about Fed monetary policy, but it was a mere signal of start of Fed hikes. [...] Then increasing the interest rate in their own economy is just going to make everything worse, right? Because a slowing down economy is going to call for lower interest rate and a depreciating currency, of course, going to make these central banks to want to increase the interest rates. [...] So what we actually show in the paper, one of the key reasons that this time is different, these economies reduce the amount of dollar debt in their economy and they also increase the monetary policy credibility. [...] But in terms of the benefits of this monetary policy credibility, of course that goes to the stabilization of the policies, short run stabilization, right.