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The international transmission of monetary shocks in a dollarized economy: The case of USA and Lebanon

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Author Info

  • Charbel Cordahi

    ()
    (Université Saint Esprit de Kaslik (USEK), Kaslik)

  • Jean-François Goux

    ()
    (GATE CNRS)

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    Abstract

    We show that an American monetary shock wields an influence, though limited, over the Lebanese output in accordance with the literature advances. However, as we are waiting for a stronger transmission of U.S. short-term rates to Lebanese short-term rates, we notice that this transmission is weak in the first year. The result can be explained by the presence of pricing-to-market. After the end of the first year, we find the traditional result where the increase in the American interest rate is transmitted integrally to the Lebanese interest rate. We recognize this phenomenon as the dollarization effect.

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    File URL: ftp://ftp.gate.cnrs.fr/RePEc/2007/0715.pdf
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    Bibliographic Info

    Paper provided by Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure in its series Working Papers with number 0715.

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    Length: 25 pages
    Date of creation: Jul 2007
    Date of revision:
    Handle: RePEc:gat:wpaper:0715

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    Related research

    Keywords: interest rate - International transmission - law of one price - monetary shock - purchasing power parity;

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    Cited by:
    1. Marina Tkalec, 2013. "Monetary Determinants of Deposit Euroization in European Post-Transition Countries," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(1), pages 89-101, March.
    2. Alper ASLAN, 2010. "The validity of PPP: evidence from Lagrange multiplier unit root tests for ASEAN countries," Economics Bulletin, AccessEcon, vol. 30(2), pages 1433-1443.
    3. Kepa Astorkiza & Ikerne del Valle, 2013. "Changing the Total Allowable Catch (TAC) Decision-Making Framework: A Central Bank of Fishes?," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(3), pages 415-431, May.

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