The Differential Regional Effects of Monetary Policy: Evidence from the U.S. States
Source: Journal of Regional Science, Volume 39, Number 2, May 1999 , pp. 339-358(20)
Abstract:In this paper we use time-series techniques to examine whether monetary policy had symmetric effects across U.S. states during the 1958:1-1992:4 period. Impulse response functions from estimated structural vector autoregression models reveal differences in policy responses, which in some cases are substantial. We provide evidence on the reasons for the measured cross-state differential policy responses. The size of a state's response is significantly related to industry-mix variables, providing evidence of an interest rate channel for monetary policy, although the state-level data offer no support for recently advanced credit-channel theories.
Document Type: Research article
Publication date: 1999-05-01