The international transmission of monetary shocks in a dollarized economy: The case of USA and Lebanon

Jean-François Goux and Charbel Cordahi ()
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Jean-François Goux: GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - ENS LSH - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique
Charbel Cordahi: USEK - Université Saint-Esprit de Kaslik

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Abstract: We show that an American monetary shock wields an influence, though limited, over the Lebanese output in accordance with the literature advances. However, as we are waiting for a stronger transmission of U.S. short-term rates to Lebanese short-term rates, we notice that this transmission is weak in the first year. The result can be explained by the presence of pricing-to-market. After the end of the first year, we find the traditional result where the increase in the American interest rate is transmitted integrally to the Lebanese interest rate. We recognize this phenomenon as the dollarization effect.

Keywords: interest rate; International transmission; law of one price; monetary shock; purchasing power parity (search for similar items in EconPapers)
Date: 2007-07
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00174466
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Citations: View citations in EconPapers (4)

Published in 2007

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00174466

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