The international transmission of monetary shocks in a dollarized economy: The case of USA and Lebanon

Charbel Cordahi () and Jean-François Goux ()
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Charbel Cordahi: Université Saint Esprit de Kaslik (USEK), Kaslik
Jean-François Goux: GATE CNRS

No 715, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: We show that an American monetary shock wields an influence, though limited, over the Lebanese output in accordance with the literature advances. However, as we are waiting for a stronger transmission of U.S. short-term rates to Lebanese short-term rates, we notice that this transmission is weak in the first year. The result can be explained by the presence of pricing-to-market. After the end of the first year, we find the traditional result where the increase in the American interest rate is transmitted integrally to the Lebanese interest rate. We recognize this phenomenon as the dollarization effect.

Keywords: interest; rate; -; International; transmission; -; law; of; one; price; -; monetary; shock; -; purchasing; power; parity (search for similar items in EconPapers)
JEL-codes: E3 E4 F3 F4 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2007-07
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:0715

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