Network effects magnify impact of US monetary policy – BdF paper


A working paper published by the Banque de France looks at the importance of network effects in magnifying the global effects of US monetary policy.

In The global financial cycle and US monetary policy in an interconnected world, Stéphane Dées and Alessandro Galesi use a large-scale vector autoregression model of the world eeconomy to assess the international spillovers of US monetary policy.

The authors find that expansionary US monetary policy helps create a global financial cycle, with the

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