The Regional Effects of Monetary Policy: The Case of the American South

Abstract

A number of studies over the past decade find that US monetary policy generates asymmetric effects on regional economies. These studies further find that the variation in industry composition across US regions is a key reason for these regional effects of monetary policy. One implication from these findings is that should a US region undergo a major restructuring of its economy that region would likely find its response to monetary policy shocks to change as well. This possibility is explored in this article by examining the regional effect of monetary policy shocks during and after the dramatic economic transformations of the American South in the twentieth century.