How Household Saving Affects Monetary Policy Spillovers

Sushant Acharya, Ozge Akinci, Silvia Miranda-Agrippino and Paolo Pesenti

No 20250407b, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: As covered in the first post in this series, the international transmission of monetary policy shocks features positive output spillovers when the so-called expenditure-switching effect is sufficiently large. Departing from textbook analysis, this post zooms in on the implications of differences across market participants with respect to their consumption preferences and ability to insure against income risk. The key message is that these features can, at least theoretically, change the impact of spillovers from positive to negative as well as alter their overall magnitude. These aspects of the international transmission mechanism are especially relevant when addressing spillovers from advanced to emerging economies.

Keywords: Global; spillovers (search for similar items in EconPapers)
JEL-codes: E32 E44 F41 (search for similar items in EconPapers)
Date: 2025-04-07
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