{ "title": "U.S. Monetary Policy Shock Spillovers: Evidence from Firm-Level Data", "publication": "IMF Working Papers, September 16, 2022", "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2022/09/16/u-s-523572", "canonical": "https://www.imf.org/en/publications/wp/issues/2022/09/16/u-s-523572", "overlayPath": "/en/publications/wp/issues/2022/09/16/u-s-523572/index.md", "summary": "We examine three main channels through which U.S. monetary policy shocks affect firm investment in foreign countries: (1) the balance sheet channel; (2) the financial channel of the exchange rate; and (3) the trade channel.", "sections": [ { "heading": "Key research question and scope", "content": "- Objective: Examine three main channels through which U.S. monetary policy shocks affect firm investment in foreign countries.\n- Channels studied:\n - The balance sheet channel.\n - The financial channel of the exchange rate.\n - The trade channel.\n- Data: Quarterly firm-level data for 63 advanced economies (AEs) and emerging market and developing economies (EMDEs) over 1996-2016.\n- Authors: Elif C Arbatli Saxegaard, Melih Firat, Davide Furceri, Jeanne Verrier.\n- Date: September 16, 2022.\n- Publication series: Working Paper No. 2022/191; Pages: 69; ISBN: 9798400219948; ISSN: 1018-5941." }, { "heading": "Main findings", "content": "- All three channels—balance sheet, financial channel of the exchange rate, and trade—play an important and independent role in transmitting U.S. monetary policy shocks to firm investment abroad.\n- Balance sheet channel:\n - U.S. monetary policy shocks have larger effects on investment for firms that are more leveraged.\n - Back-of-the-envelope calculations suggest the balance sheet channel is the most important channel of transmission of U.S. monetary policy shocks on aggregate firm investment.\n- Financial channel of the exchange rate:\n - Firms with a higher share of debt in foreign currency experience larger investment effects from U.S. monetary policy shocks.\n- Trade channel:\n - Firms operating in sectors with higher export dependence experience larger investment effects from U.S. monetary policy shocks.\n- Heterogeneity: Firm-level characteristics (leverage, share of foreign-currency debt, sectoral export dependence) significantly condition the size of spillovers." }, { "heading": "Methodology and coverage", "content": "- Empirical approach: Analysis based on quarterly firm-level data across 63 AEs and EMDEs for the period 1996-2016.\n- Scope emphasizes firm heterogeneity and cross-border spillovers from U.S. monetary policy shocks." }, { "heading": "Implications", "content": "- Policy relevance:\n - Macroeconomic effects of U.S. monetary policy extend to foreign firm investment through multiple, distinct channels.\n - Financial vulnerabilities at the firm level—especially leverage and foreign-currency debt exposure—magnify the impact of U.S. monetary policy shocks on investment.\n - Trade exposure further amplifies spillovers for export-dependent sectors.\n- Aggregate impact:\n - The balance sheet channel is likely the dominant mechanism for aggregate firm investment responses to U.S. monetary policy shocks (per authors’ back-of-the-envelope calculations).\n\nU.S. Monetary Policy Shock Spillovers: Evidence from Firm-Level Data, Elif C Arbatli Saxegaard, Melih Firat, Davide Furceri, and Jeanne Verrier, Working Paper No. 2022/191, September 16, 2022.\n\n---\n\n Content in this bundle\n\n- Working Paper\n - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2022/09/16/u-s-523572" } ], "bullets": [ "[Markdown version](/en/publications/wp/issues/2022/09/16/u-s-523572/index.md)", "[Structured JSON version](/en/publications/wp/issues/2022/09/16/u-s-523572/index.json)", "[Bundle manifest](/en/publications/wp/issues/2022/09/16/u-s-523572/bundle-manifest.json)", "Authors: Elif C Arbatli Saxegaard, Melih Firat, Davide Furceri, Jeanne Verrier", "Published: September 16, 2022", "Series: IMF Working Papers", "Objective: Examine three main channels through which U.S. monetary policy shocks affect firm investment in foreign countries.", "Channels studied:", "Data: Quarterly firm-level data for 63 advanced economies (AEs) and emerging market and developing economies (EMDEs) over 1996-2016.", "Authors: Elif C Arbatli Saxegaard, Melih Firat, Davide Furceri, Jeanne Verrier.", "Date: September 16, 2022.", "Publication series: Working Paper No. 2022/191; Pages: 69; ISBN: 9798400219948; ISSN: 1018-5941.", "All three channels—balance sheet, financial channel of the exchange rate, and trade—play an important and independent role in transmitting U.S. monetary policy shocks to firm investment abroad.", "Balance sheet channel:", "Financial channel of the exchange rate:", "Trade channel:", "Heterogeneity: Firm-level characteristics (leverage, share of foreign-currency debt, sectoral export dependence) significantly condition the size of spillovers.", "Empirical approach: Analysis based on quarterly firm-level data across 63 AEs and EMDEs for the period 1996-2016.", "Scope emphasizes firm heterogeneity and cross-border spillovers from U.S. monetary policy shocks.", "Policy relevance:", "Aggregate impact:", "**Working Paper**" ], "related": [ { "title": "Working Paper", "role": "paper", "sourceUrl": "https://www.imf.org/-/media/files/publications/wp/2022/english/wpiea2022191-print-pdf.pdf", "summary": { "path": "/-/media/files/publications/wp/2022/english/wpiea2022191-print-pdf.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/wp/2022/english/wpiea2022191-print-pdf.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/publications/wp/issues/2022/09/16/u-s-523572/index.md", "json": "/en/publications/wp/issues/2022/09/16/u-s-523572/index.json", "bundleManifest": "/en/publications/wp/issues/2022/09/16/u-s-523572/bundle-manifest.json" }, "generatedAtUtc": "2026-09-16T21:40:44.591Z" }