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If the Fed Sneezes, Who Catches a Cold?

In: NBER International Seminar on Macroeconomics 2016

Listed author(s):
  • Luca Dedola
  • Giulia Rivolta
  • Livio Stracca

This paper studies the international spillovers of US monetary policy shocks on a number of macroeconomic and financial variables in 36 advanced and emerging economies. In most countries, a surprise US monetary tightening leads to depreciation against the dollar; industrial production and real GDP fall, unemployment rises. Inflation declines especially in advanced economies. At the same time, there is significant heterogeneity across countries in the response of asset prices, and portfolio and banking cross-border flows. However, no clear-cut systematic relation emerges between country responses and likely relevant country characteristics, such as their income level, dollar exchange rate flexibility, financial openness, trade openness vs. the US, dollar exposure in foreign assets and liabilities, and incidence of commodity exports. JEL Classification: F3, F4

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This chapter was published in:
  • Richard Clarida & Lucrezia Reichlin, 2017. "NBER International Seminar on Macroeconomics 2016," NBER Books, National Bureau of Economic Research, Inc, number clar-10, October.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 13822.
    Handle: RePEc:nbr:nberch:13822
    Contact details of provider: Postal:
    National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.

    Phone: 617-868-3900
    Web page: http://www.nber.org
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