The Impact of Foreign Interest Rates on the Economy: The Role of the Exchange Rate Regime / Julian di Giovanni, Jay C. Shambaugh.

Format:

Book

Author/Creator:

di Giovanni, Julian.

Contributor:

National Bureau of Economic Research.

Shambaugh, Jay C.

Series:

Working Paper Series (National Bureau of Economic Research) no. w13467.

NBER working paper series no. w13467

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Impact of Foreign Interest Rates on the Economy

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2007.

Summary:

It is often argued that many economies are affected by conditions in foreign countries. This paper explores the connection between interest rates in major industrial countries and annual real output growth in other countries. The results show that high foreign interest rates have a contractionary effect on annual real GDP growth in the domestic economy, but that this effect is centered on countries with fixed exchange rates. The paper then examines the potential channels through which major-country interest rates affect other economies. The effect of foreign interest rates on domestic interest rates is the most likely channel when compared with other possibilities, such as a trade effect.

Notes:

Print version record

October 2007.