This paper deals with the international transmission of European and U.S. monetary shocks. First, we study how monetary shocks are transmitted in the case where all export prices are set in U.S. dollars. It is shown that U.S. shocks generate positive comovements of output across regions. On the other hand, European shocks generate negative comovements. Second, we study how the emergence of the euro as an international currency may change the international transmission of monetary shocks. If the role of the euro in international trade increases, this has signi…cant implications for the international transmission of monetary shocks. For example, the stimulate e¤ects of monetary shocks on the region’s own output are reinforced and the positive e¤ect of U.S. monetary shocks on European output reverses to negative
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