Financial Flows and the International Monetary System

Evgenia Passari, Hélène Rey

NBER Working Paper No. 21172
Issued in May 2015
NBER Program(s):   AP   IFM   ME

We review the findings of the literature on the benefits of international financial flows and find that they are quantitatively elusive. We then present evidence on the existence of a global cycle in gross cross border flows, asset prices and leverage and discuss its impact on monetary policy autonomy across different exchange rate regimes. We focus in particular on the effect of US monetary policy shocks on the UK's financial conditions.