US policy has greater impact on non-US leverage than domestic policy, paper finds

Easing monetary policy in the US leads to a greater increase in leverage in non-US financial firms than when policy eases in their own country, a team of researchers find.

The team, Stephen Cecchetti et al, use firm-level data from nearly 1,000 bank and non-bank financial institutions in 21 countries from 1998–2014. The paper aims to examine whether US monetary policy has financial stability spillovers to the rest of the world.

In contrast to US monetary policy easing, eurozone easing has a