Global Liquidity, Spillovers to Emerging Markets and Policy Responses: An Overview

Global liquidity has become a popular concept in academic and policy discussions of recent years. This concept captures overall 'ease of financing' prevalent in the world economy (Caruana 2013) and it is usually mentioned as a possible cause of capital inflows global imbalances excessive credit expansion high asset prices and exchange rate appreciations that could pose risks for price and financial stability around the world but most particularly in emerging market economies.