US Financial Shocks Quickly Impact Global Credit Spreads and Economies
The article shows that U.S. monetary policy and financial shocks can impact credit spreads in the U.K. The researchers used a two-country model to analyze the effects of these shocks on economic activity and consumer prices. They found that financial shocks have a bigger impact on economic activity and prices in both countries compared to monetary policy shocks. This suggests that international financial integration plays a significant role in transmitting U.S. shocks across borders.