Essays in international macro-finance and monetary economics

The doctoral dissertation consists of three essays in International Macro-Finance and Monetary Economics, addressing questions related to foreign exchange interventions, monetary economics and macroprudential policy. The first chapter, Macroprudential Foreign Exchange Interventions, empirically studies a panel of emerging markets to explore whether foreign exchange interventions (FXI) reduce the probability and severity of a sudden stop, and if so, what channels are at work. I show that (i) FX reserve accumulation during capital inflow surges reduces the probability and severity of a sudden stop - revealing the ex-ante role of FXI and (ii) decumulation of FX reserves during a sudden stop dampens the severity of a recession and supports the recovery of output - illustrating the ex-post role. The second chapter, Optimal Macro-Financial Policy under Regulatory Arbitrage, analyses a quantitative DSGE model of optimal monetary and macroprudential policy design, where a significant part of financial agents is outside the macroprudential regulatory perimeter. I show that optimal macroprudential policy becomes tighter, while monetary policy deviates from the objective of macroeconomic stabilization and responds to financial vulnerabilities. The third chapter, Managing Remittance Inflows with FX Interventions: Looking into the Implications for the Banking Sector, shows that while remittances improve financial depth, FXI attenuates this positive effect. The analysis suggests that FXI acts as an insurance tool that protects agents exposed to FX risk by mitigating FX volatility, but can encourage lower bank buffers.