Regional Disparities in the Transmission of Monetary Policy
FRB of St. Louis Working Paper No. 2003-008
26 Pages Posted: 27 Jun 2003
Date Written: April 29, 2003
Using a monetary VAR, we show how the depths and lengths of recessions generated by contractionary monetary policy differ a great deal across U.S. regions. Our results indicate that the Great Lakes and the Far West experience the largest output losses during a monetary-policy-induced recession, while the losses are smallest in the Mideast, New England, and the Plains. Regions with large manufacturing shares tend to have deep, but brief, recessions, whereas regions with many small firms tend to have long recessions.
JEL Classification: E52, R12
Suggested Citation: Suggested Citation