Impact of US Economic Crisis and Fed Policy on Emerging Market Economies: Evidence from BRICS Nations.

The present paper examines the spillover effect of US monetary policy shocks on five emerging market economies--Brazil, Russia, India, China, and South Africa (BRICS). The study aims to compare the impact of the US crisis on the BRICS nations considering three crisis periods--1992 Crisis, 2008 Financial Recession, and 2013-Taper Tantrum. The two models used for analyzing the impression of US policy are Vector Autoregressive (VAR) model and Impulse Response Function. Research proved that the exchange rate and balance of trade of each of the emerging nations are affected by either policy change or unpredictable circumstances that arise in the US. This impact is mostly because of the high trade relations those countries have with the US. Nevertheless, there exist some other factors like economic integration and macroeconomic features, which further stimulate the spillover effect. This paper suggests that the US policymakers should consider such effects during policy formation/change. The paper makes an essential contribution to the existing literature by mapping the footprints of US policies on the five emerging market economies on the premise of pre-crisis and post-crisis spread. [ABSTRACT FROM AUTHOR]