This study develops a structural vector autoregression (SVAR) framework to empirically examine the reciprocal transmission channels of monetary policies between China and the United States. The ...primary objective is to discern potential disparities in the spillover effects of monetary policies and ascertain any contrasting mechanisms underlying these effects across the two countries. Based on our research, it appears that there exists a certain level of поп-symmetry in the spillover effects of monetary policy between the two countries. Moreover this paper provides adequate analysis of disparities in the trade fi-amework, capital control, and financial market operations of both countries in constructing a dynamic stochastic general equilibrium (DSGE) model that incorporates financial frictions for the examination of the theoretical rationale. The empirical findings indicate that China 's monetary policy creates a spillover effect primarily through trade. In China, following an increase in its interest rates, the domestic economic activity willexperience a contraction, leading to a decline in both investment and output. Consequently, this will result in a decrease in China 's imports of investment goods from the United States, impacting the output of the US economy. In contrast, the US monetary policy exerts a spillover effect primarily through finance. An increase in interest rates by the United States is associated with a notable outflow of capital fi-от China. This leads to a rise in the financing costs for Chinese firms, consequently diminishing their overall net worth. In light of the financial accelerator effect, corporate external financing risk premium will continue to increase, exacerbating the downward trajectory of China 's output.
This paper explores for spillovers from monetary policy in the United States to a number of advanced countries, namely Canada, Denmark, the Eurozone, Japan, Sweden, Switzerland, and the United ...Kingdom. We use monthly data, from January 1997 to December 2017, and a bivariate structural GARCH-in-Mean VAR to investigate the effects of positive and negative U.S. monetary policy shocks, and also whether monetary policy uncertainty in the United States has had statistically significant spillover effects on each of the other advanced countries. Our evidence suggests that positive (negative) U.S. monetary policy shocks increase (reduce) the policy rate in each of the other countries, and that monetary policy uncertainty in the United States has a negative and statistically significant effect on the monetary policy rate of each of the other countries.
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CEKLJ, EMUNI, FIS, FZAB, GEOZS, GIS, IJS, IMTLJ, KILJ, KISLJ, MFDPS, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, SBMB, SBNM, UKNU, UL, UM, UPUK, VKSCE, ZAGLJ
This paper investigates spillovers to the Irish economy from a fiscal expansion in the rest of the euro area. We examine spillovers for government consumption and government investment, each ...conditional on active or passive monetary policy. Moreover, we compare these across two different classes of models, a DSGE model and a traditional structural model. We find that expansionary fiscal spending shocks in the rest of the euro area can lead to non-negligible spillovers to the Irish economy. This result is robust across models and spending instruments, but is conditional on the monetary stance being passive. When monetary policy is active, the spillover is smaller, depending on the extent of crowding out of private activity. When monetary policy is passive, spillovers increase the fiscal space of the country with positive spillovers.
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CEKLJ, EMUNI, FIS, FZAB, GEOZS, GIS, IJS, IMTLJ, KILJ, KISLJ, MFDPS, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, SBMB, SBNM, UKNU, UL, UM, UPUK, VKSCE, ZAGLJ
Rising US interest rates impact emerging economies through capital outflows and currency depreciations. For those with flexible exchange rates, the appropriate monetary policy response weighs the ...traditional competitiveness effect with a balance sheet effect created by the presence of foreign currency denominated debt (liability dollarization). This paper presents a basic Keynesian macro model that incorporates this balance sheet effect and demonstrates that it significantly complicates the monetary policy response to depreciations. Without full knowledge of the size of these competing effects, the central bank can make large mistakes in setting interest rates.
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BFBNIB, IZUM, KILJ, NUK, PILJ, SAZU, UL, UM, UPUK
U.S. monetary policy has been claimed to generate global spillover and to destabilize other small open economies. We analyze the effects of certain identified U.S. monetary shocks on gross capital ...flows in the Korean economy using the local projection method. Consistent with previous results on other small open economies, we initially confirm that U.S. interest rate hikes are dynamically correlated with foreign outflows and residents’ inflows. That is, not only are they correlated with withdrawals by foreigners but they are also correlated with those by domestic (Korean) investors. The results are mostly driven by portfolio flows. Second, however, the marginal response to a U.S. monetary policy shock is, on average, subdued if we focus on the sample periods after the Global financial crisis of 2007-2008 (henceforth, global financial crisis). We conjecture a possible reason behind the change, an institutional change related to financial friction. If the degree of pledgeability of the value of net worth increases, the marginal responses by both investors would drop with a U.S. monetary policy shock, consistent with our findings.
Currently, sales taxes are imposed at both the state and local levels in 37 US states. In these environments, vertical tax competition occurs as governments share a common sales tax base, and local ...jurisdictions have autonomy over sales tax rates. As cash-strapped states look to sales taxes for additional revenues, local governments may worry about potentially adverse revenue impacts, as consumers react to combined tax rate increases. This study examines state-municipal and county-municipal fiscal spillovers using an empirical approach that accounts for endogenous tax policy leadership and voter tax fatigue. Employing comprehensive longitudinal data from Oklahoma, we find that state tax hikes significantly crowd out future rate increases for the large group of jurisdictions that are designated as followers. Leader jurisdictions are not found to display crowd-out tendencies, a result that is consistent with recent work suggesting that leaders may be less influenced by vertical fiscal externalities than other jurisdictions.
Groenewold N., Chen A. and Lee G. Inter-regional spillovers of policy shocks in China, Regional Studies. Inter-regional output spillovers from policy shocks are analysed in a three-region ...vector-autoregressive (VAR)-based model of China using investment as the policy variable. The contemporaneous effect of policy is greater in the coastal region than in the other two regions, and the effect in the central region is larger than in the western region, suggesting that at least part of the expenditure boosts in the poorer inland regions find their way to the coastal provinces. These results are confirmed when the effects of the policy shocks are simulated over time and are found to be generally robust to alternative model specifications.
Groenewold N., Chen A. et Lee G. Les retombées régionales des chocs politiques en Chine, Regional Studies. A partir d'un modèle de la Chine à trois régions du type VAR, on analyse les retombées interrégionales de production qui résultent des chocs politiques, employant l'investissement comme variable de politique. L'effet contemporain de la politique s'avère plus important dans la zone côtière qu'il ne l'est dans les deux autres régions, et l'effet dans la région centrale s'avère plus important qu'il ne l'est dans la région occidentale, ce qui laisse supposer que l'impulsion donnée aux dépenses dans les zones intérieures plus défavorisées alimente dans une certaine mesure les provinces côtières. Les résultats se confirment suite à une simulation des effets temporels des chocs de politique et s'avèrent fiables en règle générale par rapport aux autres spécifications des modèles.
Chine Régional Retombées de politique
Groenewold N., Chen A. und Lee G. Interregionale Übertragungen aufgrund politischer Schocks in China, Regional Studies. Wir analysieren interregionale Leistungsübertragungen aufgrund politischer Schocks in einem VAR-basierten Dreiregionen-Modell von China, wobei wir die Investitionen als politische Variable heranziehen. Die zeitgleichen Effekte der Politik fallen in der Küstenregion stärker aus als in den anderen beiden Regionen, und der Effekt in der zentralen Region ist größer als in der westlichen Region. Dies lässt darauf schließen, dass zumindest ein Teil der Ausgabensteigerungen in den ärmeren Inlandregionen seinen Weg in die Küstenprovinzen findet. Die Ergebnisse bestätigen sich, wenn wir die Effekte über den Zeitraum der politischen Schocks hinweg simulieren, und erweisen sich generell als robust gegenüber alternativen Modellspezifikationen.
China Regional Politikübertragungen
Groenewold N., Chen A. y Lee G. Desbordamientos interregionales en los choques políticos en China, Regional Studies. Con ayuda de las inversiones como nuestra variable política, analizamos los desbordamientos de la producción interregional de los choques de la política a través de un modelo VAR basado en tres regiones de China. El efecto contemporáneo de la política es superior en la región costera que en las otras dos y el efecto en la región central es mayor que en la región occidental lo que sugiere que como mínimo parte de los impulsos inversores en las regiones interiores más pobres se orientan hacia las provincias costeras. Estos resultados se confirman cuando simulamos los efectos durante el transcurso del tiempo de los choques políticos y observamos que, en general, son contundentes comparándolos con especificaciones de modelos alternativos.
China Regional Desbordamientos políticos
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BFBNIB, IZUM, KILJ, NUK, PILJ, SAZU, UL, UM, UPUK
This chapter revisits the system of flexible exchange rates that emerged following Bretton Woods. The very success of floating rates in promoting real and financial integration is now spurring ...efforts to reintroduce elements of market segmentation. Flexible exchange rates does not fully insulate domestic financial sectors from the global financial cycle and policy spillovers. In this context, capital controls can be considered a second-best option; macroprudential policies would be preferable but it is unclear whether they can be deployed effectively.
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