study is needed — the effects of changes in u. s. monetary policy on financial and economic conditions in the rest of the world and the ways in which those foreign effects can feed back to influence conditions here at home. of course, cross - country monetary policy spillovers have been the subject of scholarly debate since the great depression, and much of the formal analysis of this topic dates back to the early 1960s. 25 but this issue has received renewed interest with the advent of unconventional monetary policies after the great recession and, more recently, the divergence of monetary policies among major advanced - economy central banks. broadly speaking, monetary policy actions in one country spill over to other economies through three main channels : changes in exchange rates ; changes in domestic demand, which alter the economy ’ s imports ; and changes in domestic financial conditions — such as interest rates and asset prices — that, through portfolio balance and other channels, affect financial conditions abroad. research by federal reserve staff suggests that, all told, u. s. monetary policy spillovers to other economies are positive — that is, policies designed to provide stimulus to the u. s. economy also boost activity abroad, as negative effects of dollar depreciation are offset by positive effects of higher u. s. imports and easier foreign financial conditions. 26 however, this issue is far from settled, as are a host of other related questions, including the following : do u. s. monetary policy actions affect advanced and emerging market countries differently? do conventional and unconventional monetary policies spill over to other countries differently? and to what extent are u. s. interest rates and financial conditions influenced by easing measures abroad? 5 / 12 bis central bankers'speeches conclusion in closing, i would like to commend the federal reserve bank of boston for organizing this conference and fostering research and debate on questions vital to our understanding of the economy. answering these questions will help the federal reserve ’ s efforts to promote a healthy economy, and i am grateful for the opportunity to speak to you today and be part of this important discussion. references agnello, luca, and ludger schuknecht ( 2011 ). “ booms and busts in housing markets : determinants and implications, " journal of housing economics, vol. 20 ( september ), pp. 171 – 90. akerlof, george a., william t. dickens, and george l. perry ( 1996 ). “ the macroeconomics of low inflation ( pdf )

participants adjust their risk management practices, and the structure of these markets continues to evolve. for example, if traditional providers of liquidity scale back their activity in response to changes in regulation and market structure, over time, this shift may create incentives for other providers, which are not similarly constrained, to step in. stress tests, such as those announced by the securities and exchange commission ( sec ) offer one way to help ensure that market participants are prepared for sharper spikes in market volatility. for instance, in the federal reserve board ’ s most recent stress test, the severely adverse scenario featured a large decrease in the prices of corporate bonds. we are in the early stages of data - based analysis of possible recent changes in the resilience of market liquidity. an upcoming study of the october 15 event will shine some light on the functioning of the u. s. treasury market, but there is still much we need to learn. more broadly, at the board, we will closely monitor and investigate the extent of changes in the resilience of liquidity in important markets, while deepening our understanding of different contributors and how market participants are adapting. another potentially important change in markets has been the increased prevalence of dark pools or proprietary trading sites housed inside broker - dealers, which provide no information to the public about the volume or prices of trades. it is possible this activity might be changing price discovery, although there is debate over the net effect. bis central bankers ’ speeches