6533b7dbfe1ef96bd1270ae7

RESEARCH PRODUCT

Regional effects of monetary policy in the U.S.: An empirical re-assessment

Pietro Pizzuto

subject

Economics and Econometricsmedia_common.quotation_subjectRomerMonetary policyRegional asymmetriesSettore SECS-P/02 Politica EconomicaMonetary economicsBEA regionsInterest rateShock (economics)Personal incomeTransmission channels of monetary policySpatial modelSingle equationEconomicsFinanceImpulse responseMonetary policy shocksmedia_common

description

Abstract This paper provides an empirical re-assessment of the regional effects of monetary policy in the U.S. We use the narrative series of Romer and Romer (2004) as a measure of monetary policy shocks and impulse response functions estimated directly from a single equation spatial model. We find that monetary policy tightening leads to a persistent decrease in regional real personal income and employment, with asymmetric effects across regions that are magnified by spatial spillovers. The magnitude of the effects depends on the period under analysis and on the direction of the monetary policy shock. We also provide evidence of the existence of the interest rate and the housing market channels, although there is weak support for the presence of the credit channels at the regional level.

yearjournalcountryeditionlanguage
2020-05-01Economics Letters
https://doi.org/10.1016/j.econlet.2020.109062