How Much Can the Fed’s Tightening Contract Global Economic Activity?

Julian di Giovanni and Neel Lahiri

No 20230213, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: What types of foreign firms are most affected when the Federal Reserve raises its policy rate? Recent empirical research used cross-country firm level data and information on input-output linkages and finds that the impact on sales and investment spending is largest in sectors with exposure to trade in intermediate goods. The research also finds that financial factors drive differences, with U.S. monetary policy spillovers having a much smaller impact on firms that are less financially constrained.

Keywords: U.S. monetary policy spillovers; Foreign firms; international production linkages; financial constraints (search for similar items in EconPapers)
JEL-codes: E52 F0 (search for similar items in EconPapers)
Date: 2023-02-13
New Economics Papers: this item is included in nep-cba, nep-fdg, nep-ifn, nep-int and nep-mon
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