Template-Type: ReDIF-Paper 1.0
Author-Name: Swapan-Kumar Pradhan
Author-X-Name-First: Swapan-Kumar
Author-X-Name-Last: Pradhan
Author-Name: Elod Takats
Author-X-Name-First: Elod
Author-X-Name-Last: Takats
Author-Name: Judit Temesvary
Author-X-Name-First: Judit
Author-X-Name-Last: Temesvary
Title: How does fiscal policy affect the transmission of monetary policy into cross-border bank lending? Cross-country evidence
Abstract: We use a rarely accessed BIS database on bilateral cross-border bank claims by bank nationality to examine the interaction of monetary and fiscal policies. We find significant interactions: the transmission of the monetary policies of major currency issuers is significantly influenced by the fiscal stance of source (home) lending banking systems. Fiscal consolidation in a source country amplifies the effect of currency issuers' monetary policy on lending. For instance, a reduction in the German debt-to-GDP ratio amplifies the negative impact of US monetary policy tightening on USD-denominated cross-border bank lending. 
Creation-Date: 2024-11
File-URL: https://www.bis.org/publ/work1226.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1226.htm
File-Format: text/html
Number: 1226
Keywords: monetary policy, government debt, cross-border claims, difference-in-differences
Classification-JEL: E63, F34, F42, G21, G38
Handle: RePEc:bis:biswps:1226