Has globalization changed the international transmission of U.S. monetary policy?

Maximilian Boeck and Lorenzo Mori

Journal of International Economics, 2025, vol. 157, issue C

Abstract: We estimate a time-varying parameter vector autoregression to examine the evolution of international spillovers of U.S. monetary policy in light of increasing globalization in real and financial markets. We find that the adverse international effects of a U.S. tightening have substantially increased over the past three decades, peaking during the Great Recession before stabilizing – a timing that aligns well with observed trends in globalization and slowbalization dynamics. Cross-country analysis and counterfactual simulations suggest that the estimated amplification of the spillover effects over time has been primarily driven by the surge in trade integration, while rising financial integration has contributed only modestly.

Keywords: Monetary policy; International spillovers; TVP-VARs (search for similar items in EconPapers)
JEL-codes: C32 E32 E52 F42 F62 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:157:y:2025:i:c:s0022199625000960

DOI: 10.1016/j.jinteco.2025.104139

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