Monetary policy in the capitals of capital

Gerko, E and Rey, H (2017) Monetary policy in the capitals of capital. Journal of the European Economic Association, 15 (4). pp. 721-745. ISSN 1542-4766

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Abstract

The importance of financial markets and international capital flows has increased greatly since the 1990s. How does this affect the effectiveness of monetary policy? We analyse the transmission of monetary policy in two important financial centres, the United States and the United Kingdom. Studying the responses of mortgage and corporate spreads, we find evidence in favour of an important financial channel in both countries. Our identification strategy allows us to study the effect of movements in the policy instruments and forward guidance, broadly defined. We also analyse international financial spillovers, which we find to be asymmetric.

Item Type: Article
Subjects: F > Financial markets
C > Capital markets
M > Monetary policy
Subject Areas: Economics
DOI: 10.1093/jeea/jvx022
Date Deposited: 20 Jul 2017 13:52
Last Modified: 05 Sep 2017 09:55
URI: http://lbsresearch.london.edu/id/eprint/843

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