European Business Schools Librarian's Group
Department of Economics Working Papers,
Vienna University of Economics and Business, Department of Economics
No 394: Re-assessing international effects of U.S. monetary policy shocks
Elizaveta Lukmanova () and Katrin Rabitsch ()
Additional contact information
Elizaveta Lukmanova: Central Bank of Ireland
Katrin Rabitsch: Vienna University of Economics (WU), Department of Economics
Abstract: In light of recent evidence on the significant contribution of persistent monetary shocks to inflation dynamics in the U.S., we study their international transmission. In contrast to standard temporary nominal interest rate shocks, persistent shocks increase long-run inflation and the nominal rate while decreasing the real rate. We find that it leads to non-negligible international spillovers and dollar depreciation. We further show that when it comes to understanding the international spillover effects of U.S. monetary policy, persistent monetary policy shocks rather than temporary nominal interest rate shocks have the potential to explain long-run co-movements of macroeconomic variables across advanced countries.
Keywords: Monetary Policy, International spillovers, Long-run Inflation, Neo-Fisher effect
JEL-codes: E12; F31; E52; E58 December 2025
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