Foreign Interest Rate shocks and Shadow Short Rates in a Small Open Economy

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This is joint work that was undertaken during my time as a visiting researcher at the Central Bank of Chile, Monetary Policy Division.

In this paper, we investigate monetary policy transmission at the Zero Lower Bound on the Chilean term structure by introducing external yield curve factors from the United States. In particular, this approach allows us to disentangle the contribution of the external factors from the United States to the Chilean measure of the shadow rate.


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Mardoqueo (Marc) Arteaga
Economist