US monetary policy and the financial channel of the exchange rate: evidence from India

The effect of US monetary policy on EMEs is one of the fiercely debated issues in international finance. We contribute to this debate using micro- and macro-level analyses from India over the period 2004-2019. Using a dynamic panel estimation model of non-financial firms, we show that US monetary tightening adversely affects firms' net worth and reduces domestic credit relative to external credit…