Journal of Business & Economic Policy

ISSN 2375-0766 (Print), 2375-0774 (Online) DOI: 10.30845/jbep

An Analysis of the Effects of US Monetary Policy on Assets Prices: A Markov Switching Approach with Commodities
A. Désiré Adom

Commodities have always been front and center in any economy through the process of production, consumption and distribution of goods and services. As such, regardless of the level of development of an economy – developing, frontier, emerging, or developed – changes in their prices carry a wide range of implications both domestically and globally. This study examines the effects of US monetary policy on commodity prices. Specifically, it empirically assesses how the form of policy regime, conventional or unconventional, implemented by US monetary authorities affects these prices using a two-state Markov switching methodology with yearly data spanning the 1995-2022 period. Findings highlight that commodity prices are sensitive to monetary policy irrespective of the regime. Moreover, it is found that conventional monetary policy practices appear more impactful than unconventional ones.

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