Pub Date : 2026-03-01Epub Date: 2026-02-02DOI: 10.1016/j.jimonfin.2026.103537
Narek Ohanyan
In a world of rising financial globalization, exchange rate fluctuations play an increasingly important role in shaping asset returns, thereby strengthening the exchange rate channel of monetary policy. Motivated by this premise, I study the design of optimal monetary policy in a small open economy in relation to its portfolio structure. The analysis shows that the optimal policy deviates from price stability by inducing an optimal co-movement between domestic and foreign inflation, thereby providing insurance against external shocks. Moreover, the optimal policy generates spillovers that lower government borrowing costs, reduce debt accumulation, and improve social welfare. As a result, the optimal policy strategy and the exchange rate regime depend on the fiscal policy conduct and country openness, and thus imply positive or negative co-movements between domestic and foreign variables.
{"title":"Country portfolios and optimal monetary policy","authors":"Narek Ohanyan","doi":"10.1016/j.jimonfin.2026.103537","DOIUrl":"10.1016/j.jimonfin.2026.103537","url":null,"abstract":"<div><div>In a world of rising financial globalization, exchange rate fluctuations play an increasingly important role in shaping asset returns, thereby strengthening the exchange rate channel of monetary policy. Motivated by this premise, I study the design of optimal monetary policy in a small open economy in relation to its portfolio structure. The analysis shows that the optimal policy deviates from price stability by inducing an optimal co-movement between domestic and foreign inflation, thereby providing insurance against external shocks. Moreover, the optimal policy generates spillovers that lower government borrowing costs, reduce debt accumulation, and improve social welfare. As a result, the optimal policy strategy and the exchange rate regime depend on the fiscal policy conduct and country openness, and thus imply positive or negative co-movements between domestic and foreign variables.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"163 ","pages":"Article 103537"},"PeriodicalIF":3.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146192194","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-02-04DOI: 10.1016/j.jimonfin.2026.103538
Rodolfo G. Campos , Ana-Simona Manu , Luis Molina , Marta Suárez-Varela
This paper analyzes the financial spillovers of shocks originating in China to emerging markets. Using a high-frequency identification strategy based on sign, relative magnitude and narrative restrictions, we find that equity markets react strongly and persistently to Chinese macroeconomic shocks, while monetary policy shocks exhibit more modest and short-lived spillovers, with effects generally smaller than those of macroeconomic shocks. Our evidence suggests that a key transmission channel is the effect of Chinese shocks on international commodity prices. These spillovers extend to various financial variables, such as sovereign and corporate spreads and exchange rates, suggesting implications for business cycles and financial stability in emerging markets.
{"title":"China’s financial spillovers to emerging markets","authors":"Rodolfo G. Campos , Ana-Simona Manu , Luis Molina , Marta Suárez-Varela","doi":"10.1016/j.jimonfin.2026.103538","DOIUrl":"10.1016/j.jimonfin.2026.103538","url":null,"abstract":"<div><div>This paper analyzes the financial spillovers of shocks originating in China to emerging markets. Using a high-frequency identification strategy based on sign, relative magnitude and narrative restrictions, we find that equity markets react strongly and persistently to Chinese macroeconomic shocks, while monetary policy shocks exhibit more modest and short-lived spillovers, with effects generally smaller than those of macroeconomic shocks. Our evidence suggests that a key transmission channel is the effect of Chinese shocks on international commodity prices. These spillovers extend to various financial variables, such as sovereign and corporate spreads and exchange rates, suggesting implications for business cycles and financial stability in emerging markets.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"163 ","pages":"Article 103538"},"PeriodicalIF":3.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146192193","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-02-02DOI: 10.1016/j.jimonfin.2026.103535
Andreas M. Fischer , Pınar Yeşin
Bank of England Governor, Mark Carney warned after the Brexit vote “the UK relies on the kindness of strangers at a time when risks to trade, investment, and financial fragmentation have increased.” In this paper, we extend the literature on foreign investment and policy uncertainty and examine whether firms resident in Switzerland attenuated their investments in the UK following the Brexit vote. Two empirical findings based on firm-level capital flows data suggest that Carney’s warning of increased risk, which we interpret in terms of heightened policy uncertainty, was correct in a narrow sense. First, short-term debt flows to the UK from Switzerland contracted significantly, while equity flows did not. Second, US firms and not EU firms resident in Switzerland reduced their capital flows to the UK. We find no evidence of Brexit disruption in the reverse direction of capital flows. Firms resident in Switzerland experienced neither a clear increase nor a clear decrease in capital flows from the UK.
{"title":"The kindness of strangers: Brexit and bilateral financial linkages","authors":"Andreas M. Fischer , Pınar Yeşin","doi":"10.1016/j.jimonfin.2026.103535","DOIUrl":"10.1016/j.jimonfin.2026.103535","url":null,"abstract":"<div><div>Bank of England Governor, Mark Carney warned after the Brexit vote “the UK relies on the kindness of strangers at a time when <em>risks</em> to trade, investment, and financial fragmentation have increased.” In this paper, we extend the literature on foreign investment and policy uncertainty and examine whether firms resident in Switzerland attenuated their investments in the UK following the Brexit vote. Two empirical findings based on firm-level capital flows data suggest that Carney’s warning of increased risk, which we interpret in terms of heightened policy uncertainty, was correct in a narrow sense. First, short-term debt flows to the UK from Switzerland contracted significantly, while equity flows did not. Second, US firms and not EU firms resident in Switzerland reduced their capital flows to the UK. We find no evidence of Brexit disruption in the reverse direction of capital flows. Firms resident in Switzerland experienced neither a clear increase nor a clear decrease in capital flows from the UK.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"163 ","pages":"Article 103535"},"PeriodicalIF":3.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146192662","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-02-12DOI: 10.1016/j.jimonfin.2026.103539
Swarnodeep Homroy , Shubhashis Gangopadhyay
This paper examines the motivations and financial consequences of corporate political advocacy by examining the pause and subsequent resumption of corporate political donations following the US Capitol riots. Firms operating in a politically polarized environment were more likely to make these announcements, regardless of firm-level political risks. The announcement returns are negative (positive) for firms exposed to high polarization and political risks (high polarization and low political risks). Store footfalls, sales, gross margins, and profitability increase for both these groups. However, firms facing high polarization and political risks are more likely to resume PAC donations within a year of the Capitol riots.
{"title":"Political polarization and corporate political advocacy","authors":"Swarnodeep Homroy , Shubhashis Gangopadhyay","doi":"10.1016/j.jimonfin.2026.103539","DOIUrl":"10.1016/j.jimonfin.2026.103539","url":null,"abstract":"<div><div>This paper examines the motivations and financial consequences of corporate political advocacy by examining the pause and subsequent resumption of corporate political donations following the US Capitol riots. Firms operating in a politically polarized environment were more likely to make these announcements, regardless of firm-level political risks. The announcement returns are negative (positive) for firms exposed to high polarization and political risks (high polarization and low political risks). Store footfalls, sales, gross margins, and profitability increase for both these groups. However, firms facing high polarization and political risks are more likely to resume PAC donations within a year of the Capitol riots.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"163 ","pages":"Article 103539"},"PeriodicalIF":3.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147402801","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2025-12-31DOI: 10.1016/j.jimonfin.2025.103506
Roberto Duncan , Enrique Martínez García , Patricia Toledo
This paper introduces novel measures to assess the effectiveness of inflation targeting (IT) and examines its performance across a broad sample of advanced economies (AEs) and emerging market and developing economies (EMDEs). Utilizing synthetic control methods, the study reveals heterogeneous effects of IT on inflation. The results indicate modest reductions in inflation levels, with greater gains observed in EMDEs compared to AEs. Statistically significant reductions are found in approximately one-third of the countries. However, nearly half of the economies experienced substantial improvements in stabilizing inflation near target levels under IT, relative to estimated counterfactual scenarios. IT also enhances economic resilience cushioning inflation from large external shocks, particularly during the 2007–09 Global Financial Crisis, with statistically significant gains observed in two-thirds of EMDEs. Additionally, the effectiveness of IT—both in shifting inflation levels and maintaining stability around target—is significantly correlated with indices of exchange rate stability and monetary policy independence, especially in EMDEs. These findings suggest that the performance of IT regimes is subject to the constraints imposed by the impossibility trilemma of international finance.
{"title":"Just do IT? An assessment of inflation targeting in a global comparative case study","authors":"Roberto Duncan , Enrique Martínez García , Patricia Toledo","doi":"10.1016/j.jimonfin.2025.103506","DOIUrl":"10.1016/j.jimonfin.2025.103506","url":null,"abstract":"<div><div>This paper introduces novel measures to assess the effectiveness of inflation targeting (IT) and examines its performance across a broad sample of advanced economies (AEs) and emerging market and developing economies (EMDEs). Utilizing synthetic control methods, the study reveals heterogeneous effects of IT on inflation. The results indicate modest reductions in inflation levels, with greater gains observed in EMDEs compared to AEs. Statistically significant reductions are found in approximately one-third of the countries. However, nearly half of the economies experienced substantial improvements in stabilizing inflation near target levels under IT, relative to estimated counterfactual scenarios. IT also enhances economic resilience cushioning inflation from large external shocks, particularly during the 2007–09 Global Financial Crisis, with statistically significant gains observed in two-thirds of EMDEs. Additionally, the effectiveness of IT—both in shifting inflation levels and maintaining stability around target—is significantly correlated with indices of exchange rate stability and monetary policy independence, especially in EMDEs. These findings suggest that the performance of IT regimes is subject to the constraints imposed by the impossibility trilemma of international finance.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"163 ","pages":"Article 103506"},"PeriodicalIF":3.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146116660","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-01-31DOI: 10.1016/j.jimonfin.2026.103536
Bingxin Ann Xing , Bruno Feunou , Roméo Tédongap
We define the Individual Excess Inflation Rates (IEIR) for consumer goods and services as their Individual Inflation Rates (IIR) minus the CPI inflation rate. Cross-sectional heterogeneity in the IEIRs of consumer items can be explained by their varying exposures to both pro-cyclical factors (e.g., long-term inflation expectations, wages, and consumer sentiment) and counter-cyclical factors (e.g., the unemployment gap, economic policy uncertainty, and financial conditions). Approximately 40% of the variation in IEIRs is attributable to the differential responses of items to these macroeconomic factors. Items that are more sensitive to pro-cyclical factors tend to display lower IEIRs, whereas those more responsive to counter-cyclical factors exhibit higher IEIRs. These findings remain robust after controlling for other potential drivers, such as inflation volatility and persistence.
{"title":"Robust regularities in the heterogeneity of consumer price inflation","authors":"Bingxin Ann Xing , Bruno Feunou , Roméo Tédongap","doi":"10.1016/j.jimonfin.2026.103536","DOIUrl":"10.1016/j.jimonfin.2026.103536","url":null,"abstract":"<div><div>We define the Individual Excess Inflation Rates (IEIR) for consumer goods and services as their Individual Inflation Rates (IIR) minus the CPI inflation rate. Cross-sectional heterogeneity in the IEIRs of consumer items can be explained by their varying exposures to both pro-cyclical factors (e.g., long-term inflation expectations, wages, and consumer sentiment) and counter-cyclical factors (e.g., the unemployment gap, economic policy uncertainty, and financial conditions). Approximately 40% of the variation in IEIRs is attributable to the differential responses of items to these macroeconomic factors. Items that are more sensitive to pro-cyclical factors tend to display lower IEIRs, whereas those more responsive to counter-cyclical factors exhibit higher IEIRs. These findings remain robust after controlling for other potential drivers, such as inflation volatility and persistence.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"163 ","pages":"Article 103536"},"PeriodicalIF":3.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146116659","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-02-12DOI: 10.1016/j.jimonfin.2026.103541
Ting Lu , Pengfei Luo
We propose a capacity investment model for both monopoly and duopoly markets that incorporates a price ceiling and carbon emissions reduction. The model reveals that a stricter price ceiling has an ambiguous effect on carbon emissions in the preemptive duopoly but increases carbon emissions in the sequential duopoly and monopoly. Besides, under carbon emissions regulation, compared to the sequential duopoly, firms in the preemptive duopoly suffer a more restrictive price ceiling. This constrained degree is higher than the scenario in the monopoly. Additionally, to effectively regulate carbon emissions, we endogenously determine price ceiling, and find that the leader in the preemptive duopoly prefers to invest earlier than in sequential duopoly, while the follower delays the investment. Compared to the monopoly, firms in the preemptive duopoly always accelerate investment. Furthermore, we find that in the preemptive scenario, firms have lower value than in the sequential scenario but higher value than in the monopoly. And consumer surplus is always higher than in both the sequential scenario and monopoly.
{"title":"Price ceiling, carbon emissions reduction and capacity investment","authors":"Ting Lu , Pengfei Luo","doi":"10.1016/j.jimonfin.2026.103541","DOIUrl":"10.1016/j.jimonfin.2026.103541","url":null,"abstract":"<div><div>We propose a capacity investment model for both monopoly and duopoly markets that incorporates a price ceiling and carbon emissions reduction. The model reveals that a stricter price ceiling has an ambiguous effect on carbon emissions in the preemptive duopoly but increases carbon emissions in the sequential duopoly and monopoly. Besides, under carbon emissions regulation, compared to the sequential duopoly, firms in the preemptive duopoly suffer a more restrictive price ceiling. This constrained degree is higher than the scenario in the monopoly. Additionally, to effectively regulate carbon emissions, we endogenously determine price ceiling, and find that the leader in the preemptive duopoly prefers to invest earlier than in sequential duopoly, while the follower delays the investment. Compared to the monopoly, firms in the preemptive duopoly always accelerate investment. Furthermore, we find that in the preemptive scenario, firms have lower value than in the sequential scenario but higher value than in the monopoly. And consumer surplus is always higher than in both the sequential scenario and monopoly.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"163 ","pages":"Article 103541"},"PeriodicalIF":3.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147402848","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-02-13DOI: 10.1016/j.jimonfin.2026.103549
Shilpa Garg , Anil Kumar Sharma
Climate change and its associated risks have now become inextricably related to the well-being of individuals, the viability of organizations, and the stability of global economies. Although, this is not a new phenomenon, but the urgency to adapt and mitigate its impact made this a crucial one. However, there is still a lack of structured review for this paradigm-shifting phenomenon. This study attempts to bridge this research void by carrying out a framework-based systematic literature review, adopting the ADO-TCM framework, from a global perspective. This review strives to present a multidisciplinary review of literature spanning two decades (2004–2024) on climate change impact through the lens of firm performance. This study carries out a systematic literature review of 300 pertinent articles retrieved from Scopus database guided by the SPAR-4-SLR protocol. This paper symbolizes the comprehensive attempt to analyse and synthesize the existing knowledge in this area and shed light on climate change’s business implications. Furthermore, this study offers insights into understanding multifaceted climate situations and improving decision-making processes following the ADO framework. Finally, this work presents the theories, context, and methods available for mapping and alleviating climate change’s influence on business performance, along with pinpointing the potentially productive areas for future research.
{"title":"Business implications of climate change: A systematic literature review adopting the ADO-TCM framework","authors":"Shilpa Garg , Anil Kumar Sharma","doi":"10.1016/j.jimonfin.2026.103549","DOIUrl":"10.1016/j.jimonfin.2026.103549","url":null,"abstract":"<div><div>Climate change and its associated risks have now become inextricably related to the well-being of individuals, the viability of organizations, and the stability of global economies. Although, this is not a new phenomenon, but the urgency to adapt and mitigate its impact made this a crucial one. However, there is still a lack of structured review for this paradigm-shifting phenomenon. This study attempts to bridge this research void by carrying out a framework-based systematic literature review, adopting the ADO-TCM framework, from a global perspective. This review strives to present a multidisciplinary review of literature spanning two decades (2004–2024) on climate change impact through the lens of firm performance. This study carries out a systematic literature review of 300 pertinent articles retrieved from Scopus database guided by the SPAR-4-SLR protocol. This paper symbolizes the comprehensive attempt to analyse and synthesize the existing knowledge in this area and shed light on climate change’s business implications. Furthermore, this study offers insights into understanding multifaceted climate situations and improving decision-making processes following the ADO framework. Finally, this work presents the theories, context, and methods available for mapping and alleviating climate change’s influence on business performance, along with pinpointing the potentially productive areas for future research.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"163 ","pages":"Article 103549"},"PeriodicalIF":3.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147402747","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-01-29DOI: 10.1016/j.jimonfin.2026.103534
Patrick A. Imam , Jonathan R.W. Temple
During a major crisis, the transitional dynamics of conditional convergence are unlikely to apply. In this paper, we introduce a Markov chain approach that integrates the study of crises and convergence. We allow upwards and downwards mobility to change when a country enters a crisis regime. We find that conflict and debt crises help explain the persistence of low relative income, and that the convergence process has changed over time. Faster global convergence in the early 2000s can be attributed partly to fewer and shorter crises, so the multiple shocks since the late 2010s are likely to have slowed income convergence.
{"title":"Growth, interrupted: How crises delay global convergence","authors":"Patrick A. Imam , Jonathan R.W. Temple","doi":"10.1016/j.jimonfin.2026.103534","DOIUrl":"10.1016/j.jimonfin.2026.103534","url":null,"abstract":"<div><div>During a major crisis, the transitional dynamics of conditional convergence are unlikely to apply. In this paper, we introduce a Markov chain approach that integrates the study of crises and convergence. We allow upwards and downwards mobility to change when a country enters a crisis regime. We find that conflict and debt crises help explain the persistence of low relative income, and that the convergence process has changed over time. Faster global convergence in the early 2000s can be attributed partly to fewer and shorter crises, so the multiple shocks since the late 2010s are likely to have slowed income convergence.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"163 ","pages":"Article 103534"},"PeriodicalIF":3.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146192192","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-01Epub Date: 2025-12-11DOI: 10.1016/j.jimonfin.2025.103505
Makram El-Shagi , Steven J. Yamarik
This paper examines the impact of Federal Reserve policy on income inequality across US states. We use the local projections method of Jordà to estimate impulse response functions for each state. We find that a restrictive monetary policy increases income inequality in almost all states, but with differing magnitudes. We also use panel analysis to examine the possible transmission mechanisms that account for these differences. Our empirical results confirm the theoretical predictions – inequality is increased by higher inflation, home ownership, and earnings in the finance, insurance and real estate (FIRE) sector; but decreased by higher housing prices, unionization rates, educational attainment and minimum wage.
{"title":"Federal reserve monetary policy and income inequality across US states","authors":"Makram El-Shagi , Steven J. Yamarik","doi":"10.1016/j.jimonfin.2025.103505","DOIUrl":"10.1016/j.jimonfin.2025.103505","url":null,"abstract":"<div><div>This paper examines the impact of Federal Reserve policy on income inequality across US states. We use the local projections method of Jordà to estimate impulse response functions for each state. We find that a <em>restrictive</em> monetary policy increases income inequality in almost all states, but with differing magnitudes. We also use panel analysis to examine the possible transmission mechanisms that account for these differences. Our empirical results confirm the theoretical predictions – inequality is increased by higher inflation, home ownership, and earnings in the finance, insurance and real estate (FIRE) sector; but decreased by higher housing prices, unionization rates, educational attainment and minimum wage.</div></div>","PeriodicalId":48331,"journal":{"name":"Journal of International Money and Finance","volume":"161 ","pages":"Article 103505"},"PeriodicalIF":3.3,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145797135","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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