02370cas a2200277 a 4500 AALejournalIMF017156 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475543056 1018-5941 BD-DhAAL BD-DhAAL Caceres, Carlos. U.S. Monetary Policy Normalization and Global Interest Rates / Carlos Caceres, Yan Carriere-Swallow, Ishak Demir, Bertrand Gruss. Washington, D.C. : International Monetary Fund, 2016. 1 online resource (46 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students As the Federal Reserve continues to normalize its monetary policy, this paper studies the impact of U.S. interest rates on rates in other countries. We find a modest but nontrivial pass-through from U.S. to domestic short-term interest rates on average. We show that, to a large extent, this comovement reflects synchronized business cycles. However, there is important heterogeneity across countries, and we find evidence of limited monetary autonomy in some cases. The co-movement of longer term interest rates is larger and more pervasive. We distinguish between U.S. interest rate movements that surprise markets versus those that are anticipated, and find that most countries receive greater spillovers from the former. We also distinguish between movements in the U.S. term premium and the expected path of risk-free rates, concluding that countries respond differently to these shocks. Finally, we explore the determinants of monetary autonomy and find strong evidence for the role of exchange rate flexibility, capital account openness, but also for other factors, such as dollarization of financial system liabilities, and the credibility of fiscal and monetary policy. Mode of access: Internet Carriere-Swallow, Yan. Demir, Ishak. Gruss, Bertrand. IMF Working Papers; Working Paper ; No. 2016/195 Full text available on IMF http://elibrary.imf.org/view/journals/001/2016/195/001.2016.issue-195-en.xml IMF e-Library