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Federal reserve's policy, global equity markets, and the local monetary policy stance

Research output: Contribution to journalArticlepeer-review

Georgios Chortareas, Emmanouil Noikokyris

Original languageEnglish
Pages (from-to)317-327
Number of pages11
JournalJournal of Banking and Finance
Early online date23 Jun 2016
Accepted/In press21 Apr 2016
E-pub ahead of print23 Jun 2016
PublishedApr 2017


King's Authors


This paper examines the extent to which local monetary policy stance determines the strength of US monetary policy international transmission to global equities. Using a sample of 35 countries, we document that US monetary policy surprises exert significant inverse effects on global equity returns. Our results suggest that countries whose policy rates are brought into line with that of the US are less sensitive to US monetary policy shocks only when they have a high and intermediate level of cross-border financial linkages, and only when they have a low and intermediate level of exchange rate volatility.

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