DP16134 Making waves: Monetary policy and its asymmetric spillovers in a globalised world

• Michele Ca’Zorzi Luca Dedola Georgios Georgiadis Marek Jarocinski Livio Stracca Georg Strasser
10 May 2021

This paper compares the international transmission of European Central Bank (ECB) and Federal Reserve System (Fed) monetary policy in a unified framework, identifying pure monetary policy shocks purged of bias from central bank information effects. The estimates reveal a stark asymmetry in the global spillovers from ECB and Fed monetary policy: Fed monetary policy shocks have a significant impact on euro area financial conditions and real activity, while ECB monetary policy shocks do not have a similar effect on the United States (US). Fed monetary policy shocks also affect real and financial variables in the rest of the world more than ECB monetary policy shocks.