Review of Economic Studies Vol. 87 No. 6 2020

U.S. Monetary Policy and the Global Financial Cycle

Silvia Miranda-Agrippino¹; Hélène Rey²

¹ Bank of England, CEPR and CfM(LSE) · ² London Business School, CEPR and NBER

Abstract

U.S. 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 U.S. 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.

DOI

10.1093/restud/rdaa019

Volume

87

Issue

6

Pages

2754-2776

Language

en

Sources

openalex bibtex:phds-export.bib crossref

Cite

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