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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
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 Macroeconomic)
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.:
- Ben S. Bernanke & Mark Gertler, 1995.
"Inside the Black Box: The Credit Channel of Monetary Policy Transmission,"
Journal of Economic Perspectives,
American Economic Association, vol. 9(4), pages 27-48, Fall.
- Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," NBER Working Papers 5146, National Bureau of Economic Research, Inc.
- Bernanke, Ben & Gertler, Mark, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Working Papers 95-15, C.V. Starr Center for Applied Economics, New York University.
- Kemp, Murray C, 1982. "The Monetary Determinants of Real Trade," Economica, London School of Economics and Political Science, vol. 49(195), pages 261-66, August.
- Dusansky, Richard, 1989. "The Demand for Money and Goods in the Theory of Consumer Choice with Money," American Economic Review, American Economic Association, vol. 79(4), pages 895-901, September.
- Theodore, Palivos & Chong K. Yip, 1996.
"The Gains from Trade for a Monetary Economy Once Again,"
Departmental Working Papers
_071, Chinese University of Hong Kong, Department of Economics.
- Theodore Palivos & Chong K. Yip, 1997. "The Gains from Trade for a Monetary Economy Once Again," Canadian Journal of Economics, Canadian Economics Association, vol. 30(1), pages 208-23, February.
- Wenli Cheng & Dingsheng Zhang, 2011. "The "Exorbitant Privilege": A Theoretical Exposition," CEMA Working Papers 435, China Economics and Management Academy, Central University of Finance and Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Qiang Gao).
If references are entirely missing, you can add them using this form.