International monetary policy transmission in EAEU countries

Elizaveta Dobronravova and Pavel Trunin

Journal of the New Economic Association, 2024, vol. 62, issue 1, 219-228

Abstract: The paper presents the analysis of the channels and potential impact of Russian monetary policy on the economies of Eurasian Economic Union members. Theoretical literature highlights three key groups of international transmission channels: international trade, migration of labor and financial channels. Our research demonstrates the significant impact of monetary policy shock in Russia on the economies of EAEU. International trade channel stands out as a key transmission channel: monetary tightening in Russia leads to the decrease in economic activity in the member states as a result of the reduction in exports of those countries, while currency depreciation, expected by economic theory, was not detected. Despite of synchronization of the interest rates, we couldn't find much evidence of high capital mobility between EAEU countries, which is the main precondition on the efficiency of financial channels of international monetary transmission. This leads to the conclusion that such behavior of interest rates might occur due to the common inflationary pressures, associated with business-cycles synchronization, strengthening of mutual trade and long-term investment.

Keywords: monetary policy; cross-border monetary spillovers; international monetary transmission; economic integration; Eurasian Economic Union (EAEU) (search for similar items in EconPapers)
JEL-codes: E52 E58 F02 F15 F36 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2024:i:62:p:219-228

DOI: 10.31737/22212264_2024_1_219-228

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