U.S. monetary policy and the global financial cycle
Journal
Review of Economic Studies
Subject
Economics
Publishing details
Authors / Editors
Rey H;Miranda-Agrippino S
Biographies
Publication Year
2020
Abstract
US monetary policy shocks induce comovements in the international financial variables that characterize the `Global Financial Cycle.' A single global factor that explains an important share of the variation of risky asset prices around the world decreases significantly after a US monetary tightening. Monetary contractions in the US lead to significant deleveraging of global financial intermediaries, a decline in the provision of domestic credit globally, strong retrenchments of international credit flows, and tightening of foreign financial conditions. Countries with floating exchange rate regimes are subject to similar financial spillovers.
Keywords
Monetary Policy; Global financial cycle; International spillovers; Identification with external instruments
Available on ECCH
No
