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US Monetary Policy and The Global Financial Cycle*

Miranda-Agrippino, S, Rey, H
  Latest Draft: 28 Mar 2019,

US monetary policy shocks induce comovements in the international fi nancial variables that characterize the "Global Financial Cycle." One global factor explaining an important share of the variation of risky asset prices around the world decreases significantly cantly after a US monetary contraction. Monetary tightening in the US leads to signi ficant deleveraging of global financial intermediaries, a decline in the provision of domestic credit globally, strong retrenchments of international credit flows, and tightening of foreign financial conditions. Countries with floating exchange rate regimes are subject to similar financial spillovers.

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This paper is a revised version of "World Asset Markets and the Global Financial Cycle". Helene Rey thanks the ERC for financial support (ERC Advanced Grant 695722).

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