Abstract
AbstractThis paper explores how trade openness influences the monetary transmission mechanism. The theoretical analysis develops an open economy New Keynesian model that features one‐way offshoring from an advanced economy to a less developed one. The model suggests that greater openness to regular trade or to offshoring reduces the effect of monetary policy on domestic economies, although these two influences affect the monetary transmission mechanism via different channels. The empirical section estimates an interacted‐panel VAR model with U.S. industry data and confirms that greater exposure to regular trade or to offshoring significantly reduces the effect of monetary policy.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
