Research
Working Papers
- Do Central Banks Follow the Fed? with Alfredo Mendoza-Fernández
Abstract
Using a newly constructed dataset covering over 9,500 monetary policy meetings across 59 economies, we show that emerging market economy (EME) central banks systematically move in unison with the Fed, whereas advanced economy central banks do not. We present evidence that this heterogeneity arises because, in EMEs, U.S. monetary shocks are perceived as inflationary, transmitted through exchange rate fluctuations that affect import prices and firms’ costs, owing to the greater prevalence of dollar-invoiced imports and dollar debt. A three-bloc open-economy New Keynesian model with dominant currency pricing and partial debt dollarization rationalizes these empirical patterns. The model highlights that EME responses stem from the immediate impact of Fed shocks on exchange rates and, in turn, on inflation.
- Fed Information Effects? Evidence from Industrial Production
Abstract
Do monetary policy actions signal to markets about economic conditions, known as the Fed information effect? I test this using a natural experiment: when industrial production data, collected by the Fed, are released immediately after FOMC meetings, the Fed can have private information about the macroeconomy. Financial market responses around these meetings confirm an additional effect of monetary policy shocks, consistent with an information effect. Controlling for these meetings, the effects of monetary policy shocks are larger than previously estimated—100 bps increase in the policy rate causes a 10% decline in the S&P 500 rather than a 6% decline.
- Effectiveness of Sterilized Foreign Exchange Intervention under Imperfect Financial Markets
Work in Progress
- Offshore dollar deposits: drivers and impact on the global financial system, with Stefan Avdjiev, Sonya Zhu
- forthcoming BIS Working Paper
- Monetary Policy Shocks over the Policy Path, with Regis Barnichon
Academic Publications
The Dollar’s Imperial Circle, with Ozge Akinci, Gianluca Benigno and Jon Turek, IMF Economic Review, 2024.
- NY Fed Staff Report, CEPR, IMF Economic Review
- In the News: New York Times, Bloomberg, Reuters
Policy Publications
- Amid wartime disruptions, most emerging-market central banks will follow the Fed, Peterson Institute for International Economics, April 2026, with Alfredo Mendoza-Fernández, and Maury Obstfeld.
- The Dollar’s Imperial Circle, Federal Reserve Bank of New York Liberty Street Economics, March 2023, with Ozge Akinci, Gianluca Benigno, and Jon Turek.
- Pandemic Wage Pressures, Federal Reserve Bank of New York Liberty Street Economics, August 4, 2022, with Gianluca Benigno.