If the Fed Sneezes, Who Catches a Cold?

By Luca Dedola, G. Rivolta, Livio Stracca. 2017

207 citations recorded by the source corpus.

This paper studies the international spillovers of US monetary policy shocks on a number of macroeconomic and financial variables in 36 advanced and emerging economies. In most countries, a surprise US monetary tightening leads to depreciation against the dollar; industrial production and real GDP fall, unemployment rises. Inflation declines especially in advanced economies. At the same time, there is significant heterogeneity across countries in the response of asset prices, and portfolio and banking cross-border flows. However, no clear-cut systematic relation emerges between country responses and likely relevant country characteristics, such as their income level, dollar exchange rate flexibility, financial openness, trade openness vs. the US, dollar exposure in foreign assets and liabilities, and incidence of commodity exports.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/32e05dcab4e5ec9be33beb2e7491980678eb079c

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Citations in the corpus

U.S. Monetary Policy and International Risk Spillovers (2019, background): “As cited above, di Giovanni et al. (2018) show that UIP deviations move with global risk sentiments in Turkey and Kalemli-Özcan and Varela (2019) generalize this fact to more countries.”
Foreign effects of higher U.S. interest rates (2019, background): “Di Giovanni and Shambaugh (2008) find that high foreign interest rates have a contractionary effect on real GDP in the domestic economy, but that this effect is centered on countries with fixed exchange rates.”