Whether the global spillovers from changes in monetary policy were viewed as benign or challenging depends on the relative strength of the three transmission effects described earlier, the relative divergence of conditions in foreign economies, and the flexibility of their monetary policy tools to offset divergent spillovers.
To illustrate this point, let’s start with a case where the effect of easing through unconventional means was broadly welcomed. From 2008 through 2009, the Federal Reserve eased policy through cuts in its policy rate and through large-scale asset purchases.