Monetary Policy Matters: New Evidence Based on a New Shock Measure

WPIEA2010230 Image
Price:  $18.00

Author/Editor: Christopher W. Crowe, S. Mahdi Barakchian
Release Date: © October, 2010
ISBN : 978-1-45520-895-1
Stock #: WPIEA2010230
English
Stock Status: On back-order

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Description

Conventional VAR and non-VAR methods of identifying the effects of monetary policy shocks on the economy have found a negative output response to monetary tightening using U.S. data over the 1960s-1990s. However, we show that these methods fail to find this contractionary effect when the sample is restricted to the period since the 1980s, apparently due to changes in the policymaking environment that reduce their effectiveness. Identifying policy shocks using Fed Funds futures data, we recover the contractionary effect of monetary tightening on output and find that almost half of output variation over the period appears due to policy shocks.

Taxonomy

Economic policy , Monetary policy




More publications in this series: Working Papers


More publications by: Christopher W. Crowe ; S. Mahdi Barakchian