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Transmission of U.S. Monetary Policy to Commodity Exporters and Importers

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  • Myunghyun Kim

    (Sungkyunkwan University)

Abstract

This paper studies international transmission of U.S. monetary policy shocks to commodity exporters and importers. After first showing empirically that the shocks have stronger effects on commodity exporters than on importers using structural VARs, I then augment a standard three-country model to include commodities. Consistent with the empirical evidence, the model indicates that an expansionary monetary policy shock to the U.S. increases the aggregate output of commodity exporters by more than that of importers. This is primarily because the increased U.S. aggregate demand triggered by the shock leads to greater U.S. demand for commodities and higher commodity prices, and thus the exports of commodity exporters increase relative to those of commodity importers. (Copyright: Elsevier)

Suggested Citation

  • Myunghyun Kim, 2022. "Transmission of U.S. Monetary Policy to Commodity Exporters and Importers," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 43, pages 152-167, January.
    • Handle: RePEc:red:issued:19-14
    DOI: 10.1016/j.red.2021.02.005
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    More about this item

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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