We estimate spillovers for different measures in the Federal Reserve's monetary policy toolkit and find that: (i) forward guidance and large-scale asset purchases entail spillovers to the rest of the world that are as large as the domestic effects in the US; (ii) spillovers transmit predominantly through financial channels centering on global investors' risk appetite and manifest in changes in equ. [...] In particular, analyzing the effects of Fed policy has become more complex due to attainment of the zero lower bound after the Global Financial Crisis, the use of forward guidance about the future course of policy rates, and large-scale asset purchases (LSAPs). [...] Identifying exogenous variation to the different measures of the Fed’s toolkit Estimating the causal effects of Fed policy requires the use of exogenous variation in terms of policy shocks. [...] Under the assumption that financial markets price in the entire expected endogenous response of the central bank to the state of the economy, such intra-daily interest-rate surprises reflect exogenous variation that can be exploited to estimate the causal effects of monetary policy. [...] SUERF Secretariat c/o OeNB SUERF’s events and publications The views expressed are those of the Otto-Wagner-Platz 3 provide a unique European author(s) and not necessarily those of A-1090 Vienna, Austria network for the analysis and the institution(s) the author(s) is/are Phone: +43-1-40420-7206 discussion of these and related issues.
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