International Transmission of Monetary Shocks and the Non-Neutrality of International Money
AbstractThis paper investigates how monetary shocks are transmitted internationally. It shows that where a national currency is used as an international medium of exchange, the international money is non-neutral. In particular, an increase in the supply of international money leads to a transfer of real resources to the international money-issuing country from its trading partner. It also induces an expansion of the non-tradable sector in the international money-issuing country, and an expansion the tradable sector in its trading partner. The real impact of a monetary shock is greater under a fixed exchange rate system than under a flexible exchange rate system.
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Bibliographic InfoPaper provided by China Economics and Management Academy, Central University of Finance and Economics in its series CEMA Working Papers with number 434.
Length: 22 pages
Date of creation: 2011
Date of revision:
demand for money; demand for international currency; monetary policy; exchange rate; non-neutrality of money;
Other versions of this item:
- Wenli Cheng & Dingsheng Zhang, 2012. "International Transmission of Monetary Shocks and the Non‐neutrality of International Money," Review of International Economics, Wiley Blackwell, vol. 20(1), pages 134-149, 02.
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- F31 - International Economics - - International Finance - - - Foreign Exchange
- E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-21 (All new papers)
- NEP-CBA-2011-07-21 (Central Banking)
- NEP-IFN-2011-07-21 (International Finance)
- NEP-MON-2011-07-21 (Monetary Economics)
- NEP-OPM-2011-07-21 (Open Economy Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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