This paper reviews the main literature on US monetary policy spillovers to the euro area and describes the main channels of international transmission. Moreover, in the empirical section, it presents updated estimates of the spillover effects, based on econometric models in which the monetary shock is identified by exploiting high-frequency surprises in asset prices.
Monetary tightening in the US causes a deterioration in financial conditions, depresses global economic activity, appreciates the US dollar, and reduces the price of oil. The effects on the euro-area economy are recessionary and disinflationary despite a depreciation of the euro.
