Examining Asymmetric State-Level Impacts of U.S. Monetary Policy Surprise from 1970-2012
Public Deposited- Last Modified
- May 26, 2020
- Creator
-
Fite, Caroline
- Affiliation: College of Arts and Sciences, Department of Economics
- Abstract
- This paper uses a two-part model to measure the asymmetric responses to monetary policy surprise in U.S. states from 1970-2012. While there is extensive study in the area of monetary theory, there has been limited theoretical discussion surrounding states as individual, heterogeneous economies subjected to a monetary system that views them as equal parts of the aggregate. In addition, studies that have attempted to model these asymmetries face empirical constraints in modeling the root causes of differing state effects. We overcome these empirical challenges by using time series methods to produce an aggregate vector autoregressive model measuring the determinants of monetary policy. We feed this model into a state-level panel data model as an exogenous shock to state economies, finding that monetary surprise leads to lower growth in state economic activity. We find that states have statistically different reactions to monetary shocks, with states in the Great Lakes region being most sensitive to unexpected changes in monetary policy. Differences in industry composition, state fiscal policy, and business size do not substantively or significantly influence a states’ response to policy. Instead, we find that reactions are mostly determined as a result of their regional geography, providing support for limited regional monetary autonomy in district banks.
- Date of publication
- spring 2016
- Keyword
- DOI
- Resource type
- Rights statement
- In Copyright
- Note
- Funding: None
- Advisor
- Francis, Neville
- Degree
- Bachelor of Arts
- Honors level
- Honors
- Degree granting institution
- University of North Carolina at Chapel Hill
- Graduation year
- 2016
- Language
- English
- Extent
- 57
Relations
- Parents:
This work has no parents.
Items
| Thumbnail | Title | Date Uploaded | Visibility | Actions |
|---|---|---|---|---|
|
|
Thesis.pdf | 2020-05-26 | Public | Download |