Monetary Policy in the Capitals of Capital | Zendy

Elena Gerko | Zendy; Hélène Rey | Zendy

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Monetary Policy in the Capitals of Capital

Author(s) -

Elena Gerko,

Hélène Rey

Publication year - 2017

Publication title -

journal of the european economic association

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 7.792

H-Index - 93

eISSN - 1542-4774

pISSN - 1542-4766

DOI - 10.1093/jeea/jvx022

Subject(s) - monetary policy , economics , capital flows , monetary economics , capital (architecture) , transmission channel , identification (biology) , financial market , capital flight , credit channel , international economics , finance , inflation targeting , transmission (telecommunications) , market economy , liberalization , botany , electrical engineering , archaeology , biology , history , incentive , engineering

The importance of financial markets and international capital flows has increased greatly since the 1990s. How does this affect the effectiveness of monetary policy? We analyse the transmission of monetary policy in two important financial centres, the United States and the United Kingdom. Studying the responses of mortgage and corporate spreads, we find evidence in favour of an important financial channel in both countries. Our identification strategy allows us to study the effect of movements in the policy instruments and forward guidance, broadly defined. We also analyse international financial spillovers, which we find to be asymmetric.

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