Import Tariffs and the Systematic Response of Monetary Policy Perspective

Alessandro Franconi and Lucas Hack

Working papers from Banque de France

Abstract: We estimate the macroeconomic effects of U.S. imports tariff shocks using several tariff measurement and identification approaches. Tariff shocks reduce output but increase consumer prices. Monetary policy partially accommodates these shocks with a policy easing. To quantify the dependence on systematic monetary policy, we use empirically identified monetary policy shocks to construct counterfactuals that are robust against model misspecification and the Lucas critique. When monetary policy strictly stabilizes inflation, the output contraction at the trough is 36% larger than in the baseline. In contrast, strict output stabilization implies a peak inflation effect that almost doubles, compared to the baseline.

Keywords: Tariffs; Trade; Imports; Monetary Policy; Counterfactuals (search for similar items in EconPapers)
JEL-codes: C32 E31 E32 E52 F14 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:1035

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