Monetary Policy in the Capitals of Capital

Elena Gerko and Helene Rey

No 23651, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The importance of financial markets and international capital flows have 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 movements in the policy rates and the effect of forward guidance, broadly defined. We also analyse international financial spillovers, which we find to be asymmetric.

JEL-codes: E4 E52 E58 F41 F6 G15 (search for similar items in EconPapers)
Date: 2017-08
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mac, nep-mon and nep-opm
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Published as Elena Gerko & Hélène Rey, 2017. "Monetary Policy in the Capitals of Capital," Journal of the European Economic Association, vol 15(4), pages 721-745.

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Journal Article: Monetary Policy in the Capitals of Capital (2017)
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