US monetary policy shocks have global impact, affecting economies worldwide.
The study looked at how changes in US monetary policy affect countries around the world. They found that US policy changes have big effects on both advanced and emerging economies, even if they have flexible exchange rates. The effects are stronger when US policy tightens. Trade and financial channels are important in transmitting these effects, along with oil and commodity prices. Different countries are impacted differently based on their exchange rates, exposure to the US dollar, and capital control policies.