Regional effects of monetary policy in the U.S.: An empirical re-assessment

Pietro Pizzuto

Economics Letters, 2020, vol. 190, issue C

Abstract: This paper provides an empirical re-assessment of the regional effects of monetary policy in the U.S. We use the narrative series of Romer and Romer (2004) as a measure of monetary policy shocks and impulse response functions estimated directly from a single equation spatial model. We find that monetary policy tightening leads to a persistent decrease in regional real personal income and employment, with asymmetric effects across regions that are magnified by spatial spillovers. The magnitude of the effects depends on the period under analysis and on the direction of the monetary policy shock. We also provide evidence of the existence of the interest rate and the housing market channels, although there is weak support for the presence of the credit channels at the regional level.

Keywords: Monetary policy shocks; Transmission channels of monetary policy; Regional asymmetries; BEA regions (search for similar items in EconPapers)
JEL-codes: E32 E52 R11 R12 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:190:y:2020:i:c:s0165176520300689

DOI: 10.1016/j.econlet.2020.109062

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