Author : Julian Di Giovanni
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (135 download)
Book Synopsis The Impact of U.S. Monetary Policy on Foreign Firms by : Julian Di Giovanni
Download or read book The Impact of U.S. Monetary Policy on Foreign Firms written by Julian Di Giovanni and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper uses cross-country firm-level data to explore the impact of U.S. monetary policy shocks on firms' sales, investment, and employment. We estimate a sizable impact of U.S. monetary policy on the average foreign firm, while controlling for other macroeconomic and financial variables like the VIX and exchange rate fluctuations that accompany U.S. monetary policy changes. We then quantify the role of international trade exposure and financial constraints in transmitting monetary policy shocks to firms, allowing for a better identification of the importance of external demand effects and the interest rate channel. We first exploit cross-country sector-level data on intermediate and final goods trade to show that greater global production linkages amplify the impact of U.S. monetary policy at the firm level. We then show that the impact varies along the firm-level distribution of proxies for firms' financial constraints (for example, size and net worth), with the impact being significantly attenuated for less constrained firms.