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The international transmission of monetary shocks in a dollarized economy: The case of USA and Lebanon

Author

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  • Jean-François Goux

    (GATE - Groupe d'analyse et de théorie économique - UL2 - Université Lumière - Lyon 2 - ENS LSH - Ecole Normale Supérieure Lettres et Sciences Humaines - CNRS - Centre National de la Recherche Scientifique)

  • Charbel Cordahi

    (USEK - Université Saint-Esprit de Kaslik)

Abstract

We show that an American monetary shock wields an influence, though limited, over the Lebanese output in accordance with the literature advances. However, as we are waiting for a stronger transmission of U.S. short-term rates to Lebanese short-term rates, we notice that this transmission is weak in the first year. The result can be explained by the presence of pricing-to-market. After the end of the first year, we find the traditional result where the increase in the American interest rate is transmitted integrally to the Lebanese interest rate. We recognize this phenomenon as the dollarization effect.

Suggested Citation

  • Jean-François Goux & Charbel Cordahi, 2007. "The international transmission of monetary shocks in a dollarized economy: The case of USA and Lebanon," Post-Print halshs-00174466, HAL.
    • Handle: RePEc:hal:journl:halshs-00174466
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00174466
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    References listed on IDEAS

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    4. Marina Tkalec, 2013. "Monetary Determinants of Deposit Euroization in European Post-Transition Countries," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(1), pages 89-101, March.

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    Keywords

    interest rate; International transmission; law of one price; monetary shock; purchasing power parity;
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