Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/227930
Authors: 
Bräuning, Falk
Sheremirov, Viacheslav
Year of Publication: 
2019
Series/Report no.: 
Working Papers No. 19-15
Abstract: 
We estimate that U.S. monetary policy has sizable spillover effects on global economic activity. In response to a surprise increase in the federal funds rate of 25 basis points, real output in our sample of 44 countries declines on average by 0.9% after three years. We find that international trade is a more important factor than international finance in explaining these spillovers. In particular, countries with a high share of exports and imports in output have 79% larger responses than countries with a low share, whereas we do not find significant heterogeneity depending on a country's financial openness. Bilateral trade linkages appear to be quantitatively important, as the network amplification effect accounts for 45% of the total spillover effect at the peak horizon. We conclude that trade networks could be an important ingredient of theoretical models focusing on the international effects of U.S. monetary policy shocks.
Subjects: 
financial linkages
international spillovers
monetary shocks
trade networks
JEL: 
E52
F42
F44
G15
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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