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Author:di Giovanni, Julian 

Discussion Paper
The International Spillover of U.S. Monetary Policy via Global Production Linkages

The recent era of globalization has witnessed growing cross-country trade integration as firms’ production chains have spread across the world, and with stock market returns becoming more correlated across countries. While research has predominantly focused on how financial integration impacts the propagation of shocks across international financial markets, trade also influences these cross-border spillovers. In particular, one important aspect, highlighted by the recent work of di Giovanni and Hale (2020), is how the global production network influences the transmission of U.S. monetary ...
Liberty Street Economics , Paper 20210106

Discussion Paper
Is the Green Transition Inflationary?

Are policies aimed at fighting climate change inflationary? In a new staff report we use a simple model to argue that this does not have to be the case. The model suggests that climate policies do not force a central bank to tolerate higher inflation but may generate a trade-off between inflation and employment objectives. The presence and size of this trade-off depends on how flexible prices are in the “dirty” and “green” sectors relative to the rest of the economy, and on whether climate policies consist of taxes or subsidies.
Liberty Street Economics , Paper 20230214

Discussion Paper
Global Supply Chain Pressure Index: May 2022 Update

Supply chain disruptions continue to be a major challenge as the world economy recovers from the COVID-19 pandemic. Furthermore, recent developments related to geopolitics and the pandemic (particularly in China) could put further strains on global supply chains. In a January post, we first presented the Global Supply Chain Pressure Index (GSCPI), a parsimonious global measure designed to capture supply chain disruptions using a range of indicators. We revisited our index in March, and today we are launching the GSCPI as a standalone product, with new readings to be published each month. In ...
Liberty Street Economics , Paper 20220518

Is the Green Transition Inflationary?

We develop a two-sector New Keynesian model to analyze the inflationary effects of climate policies. Climate policies do not force a central bank to tolerate higher inflation, but may generate a tradeoff between the central bank's objectives for inflation and real activity. The presence and size of this tradeoff depends on how flexible prices are in the “dirty” and “green” sectors relative to the rest of the economy, and on whether climate policies consist of taxes or subsidies.
Staff Reports , Paper 1053

Discussion Paper
When Will U.S. Exports Take Off?

The economic recovery from the COVID-19 pandemic has been uneven across countries and sectors. While U.S. imports have rebounded to surpass their level before the collapse in 2020, U.S. exports remain far below their pre-pandemic level. This asymmetry in part reflects the different sectoral compositions of imports and exports. U.S. imports are driven by goods trade, while exports rely more heavily on services trade. A key component of services exports is foreign travel to the United States, which has dried up due to the suspension of nonessential travel imposed in March 2020. However, U.S. ...
Liberty Street Economics , Paper 20220103

Government Procurement and Access to Credit: Firm Dynamics and Aggregate Implications

We provide a framework to study how different allocation systems of public procurement contracts affect firm dynamics and long-run macroeconomic outcomes. We start by using a newly created panel data set of administrative data that merges Spanish credit register loan data, quasi-census firm-level data, and public procurement projects to study firm selection into procurement and the effects of procurement on credit growth and firm growth. We show evidence consistent with the hypotheses that there is selection of large firms into procurement, that procurement contracts provide useful collateral ...
Staff Reports , Paper 1006

Discussion Paper
How Much Can the Fed’s Tightening Contract Global Economic Activity?

What types of foreign firms are most affected when the Federal Reserve raises its policy rate? Recent empirical research used cross-country firm level data and information on input-output linkages and finds that the impact on sales and investment spending is largest in sectors with exposure to trade in intermediate goods. The research also finds that financial factors drive differences, with U.S. monetary policy spillovers having a much smaller impact on firms that are less financially constrained.
Liberty Street Economics , Paper 20230213

Global Supply Chain Pressures, International Trade, and Inflation

We study the impact of the COVID-19 pandemic on euro area inflation and how it compares to the experiences of other countries, such as the United States, over the two-year period 2020-21. Our model-based calibration exercises deliver four key results: (1) compositional effects, or the switch from services to goods consumption, are amplified through global input-output linkages, affecting both trade and inflation; (2) inflation can be higher under sector-specific labor shortages relative to a scenario with no such supply shocks; (3) foreign shocks and global supply chain bottlenecks played an ...
Staff Reports , Paper 1024

Discussion Paper
A New Barometer of Global Supply Chain Pressures

Supply chain disruptions have become a major challenge for the global economy since the start of the COVID-19 pandemic. Factory shutdowns (particularly in Asia) and widespread lockdowns and mobility restrictions have resulted in disruptions across logistics networks, increases in shipping costs, and longer delivery times. Several measures have been used to gauge these disruptions, although those measures tend to focus on selected dimensions of global supply chains. In this post, we propose a new gauge, the Global Supply Chain Pressure Index (GSCPI), which integrates a number of commonly used ...
Liberty Street Economics , Paper 20220104

The Impact of U.S. Monetary Policy on Foreign Firms

This paper uses cross-country firm-level data to explore the impact of U.S. monetary policy shocks on firms’ sales, investment, and employment. We estimate a sizable impact of U.S. monetary policy on the average foreign firm, while controlling for other macroeconomic and financial variables like the VIX and exchange rate fluctuations that accompany U.S. monetary policy changes. We then quantify the role of international trade exposure and financial constraints in transmitting monetary policy shocks to firms, allowing for a better identification of the importance of external demand effects ...
Staff Reports , Paper 1039



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