US Monetary Policy and The Global Financial Cycle*
Review of Economic Studies 2020 [Open Access: https://doi.org/10.1093/restud/rdaa019]

Miranda-Agrippino, S., Rey H.
Date Published: 2020 Silvia Miranda-Agrippino, Hélène Rey, U.S. Monetary Policy and the Global Financial Cycle, The Review of Economic Studies, Volume 87, Issue 6, November 2020, Pages 2754–2776.

Abstract:
US monetary policy shocks induce comovements in the international financial variables that characterize the "Global Financial Cycle." One global factor explaining an important share of the variation of risky asset prices around the world decreases significantlycantly after a US monetary contraction. Monetary tightening in the US leads to significant deleveraging of global financial intermediaries, a decline in the provision of domestic credit globally, strong retrenchments of international credit flows, and tightening of foreign financial conditions. Countries with floating exchange rate regimes are subject to similar financial spillovers.



Citation:
Silvia Miranda-Agrippino, Hélène Rey, U.S. Monetary Policy and the Global Financial Cycle, The Review of Economic Studies, Volume 87, Issue 6, November 2020, Pages 2754–2776, https://doi.org/10.1093/restud/rdaa019 Download BibTex citation

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*This paper is a revised version of "World Asset Markets and the Global Financial Cycle". Helene Rey thanks the ERC for financial support (ERC Advanced Grant 695722).

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