Zahra Niazi-Int-Rate

Share this article

Facebook
Twitter
LinkedIn

Abstract

In recent years, global economies have been confronted with multiple challenges, including but not limited to the COVID-19 Pandemic, natural disasters, and the Russia-Ukraine War. The impact of these events has been stronger for developing countries and emerging markets. While struggling to grapple with the stronger impact of these challenges, the implementation of tight monetary policies by the United States’ Federal Reserve System (or the Fed) and other major advanced economies has given rise to concerns about economic stability in developing countries. In view of this, the present Working Paper aims to explore the channels through which the interest rate hike, by the US and central banks of the major advanced economies, impacts key determinants of economic growth in developing countries and emerging market economies. The findings of the study suggest that rising interest rates in advanced nations have multiple adverse impacts. First, rising interest rates in advanced nations increase debt levels in the debtor countries, which can stifle their level of capital formation and productivity growth. Second, they stimulate capital outflows from developing countries, which can adversely affect their capital formation and productivity growth. Third, these interest rate hikes are followed by similar policy moves in developing countries, which can have a negative impact on the cost of domestic borrowing and investment, while also affecting productivity growth. Fourth, a lower appetite for foreign goods and services due to sluggish growth in major economies can have an adverse impact on emerging markets and developing economies by dampening foreign demand for their manufactured goods and commodities. The paper concludes by offering recommendations for developing countries to grapple with such adverse monetary conditions, and for the developed economies on how to help mitigate these.

Working Paper

Recent Publications

Browse through the list of recent publications.

Evaluating the Potential of Carbon Capture and Storage Technology in Pakistan

Technology and innovation are emerging dimensions of climate discourse in contemporary times. Climate technologies  are rapidly becoming instrumental in reducing greenhouse gas (GHG) emissions and adapting to the detrimental impacts of climate change. Carbon Capture and Storage (CCS) technology has the potential to expedite endeavours towards climate change mitigation in environmentally vulnerable countries.
  879 views

Read More »

Operation Swift Retort: Five Years On

The nature of Indo-Pak relations has been turbulent right from the onset. Numerous events have influenced the trajectory of this bilateral relationship over time. In this regard, February 2019 stands out as both countries were on the verge of military escalation and nearly went to war, was it not for the foresight and restraint of Pakistan’s leadership.
  285 views

Read More »

3J’s in PAF’s Fighter Fleet: A Lethal Combination

The Pakistan Air Force (PAF), known for its forward-thinking approach, has consistently embraced cutting-edge technologies, boasting a fleet composed of advanced aircraft. Currently, the PAF operates two formidable ‘J series’ fighters: the JF-17 and J-10C, alongside other potent fighters like the US F-16, French Mirage, and Chinese F-7P (originally J-7) aircraft.
  966 views

Read More »

Stay Connected

Follow and Subscribe

Join Our Newsletter
And get notified everytime we publish new content.

© 2022 CASSTT ALL RIGHTS RESERVED

Developed By Team CASSTT

Contact CASS

CASS (Centre for Aerospace & Security Studies), Old Airport Road, Islamabad
+92 51 5405011
cass.thinkers@casstt.com
career@casstt.com

All views and opinions expressed or implied are those of the authors/speakers/internal and external scholars and should not be construed as carrying the official sanction of CASS.