The Spillover Effects of Monetary Policy Uncertainty in Major Financial Powers on Abnormal Capital Fluctuations:Taking the United States as An Example
Based on quarterly data of cross-border capital flows from 60 countries between 1990 and 2020,this paper ex-amines the spillover effects of the USmonetary policy uncertainty on abnormal capital flows.The study finds that increased uncertainty in the US monetary policy leads to a higher probability of capital sudden stops and withdrawals in other countries.These results remain robust after controlling time trends,changing estimation models,and substituting the dependent and lagged independent variables.Further research shows that political ties between various countries and the US mitigate the ad-verse effects of US monetary policy uncertainty on abnormal capital flows,whereas trade ties with the US amplify these effects.Heterogeneity analysis indicates that the impact of US monetary policy uncertainty on abnormal capital flows is more significant for developed economies and countries with more flexible exchange rate regimes,more open capital accounts,and higher levels of financial development.These findings have important implications for major financial powers to consider the interests of other countries and enhance the transparency of their monetary policies.Additionally,they highlight the impor-tance for other countries to strengthen international policy coordination and enhance their ability to respond to the spillover effects of major powers'monetary policy uncertainty.
monetary policy uncertaintycross-border capital flowsabnormal capital fluctuationspillover effects
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