Norges Bank

Working Paper

Has globalization changed the international transmission of U.S. monetary policy?

Maximilian Boeck and Lorenzo Mori
Working Paper


We estimate a time-varying parameter vector autoregression to examine the evolution of international spillovers of U.S. monetary policy in light of increasing globalization in real and financial markets. We find that the adverse international effects of a U.S. tightening have substantially increased over the past three decades, peaking during the Great Recession. Based on a cross-country analysis and counterfactual simulations, we argue that such amplification can primarily be attributed to the surge in trade integration, while the role of rising financial integration in explaining the time-variation is limited.

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ISSN 1502-8143 (online)

Published 19 December 2023 15:00
Published 19 December 2023 15:00