Would the Bundesbank have prevented the Great Inflation in the United States?

Arbeitspapier

Policy counterfactuals based on estimated structural VARs routinely suggest that bringing Alan Greenspan back in the 1970s’ United States would not have prevented the Great Inflation. We show that a standard policy counterfactual suggests that the Bundesbank–which is near-universally credited for sparing West Germany the Great Inflation–would also not have been able to prevent the Great Inflation in the United States. The sheer implausibility of this result sounds a cautionary note on taking the outcome of SVAR-based policy counterfactuals at face value, and raises questions on the very reliability of such exercises.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 1134

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Money and Interest Rates: Forecasting and Simulation: Models and Applications ; Monetary Policy ; Central Banks and Their Policies
• Subject: Bayesian VARs ; Great Inflation ; identified VARs ; policy counterfactuals ; stochastic volatility ; time-varying parameters ; VAR-Modell ; Bayes-Statistik ; Stochastischer Prozess ; Volatilität ; Geldpolitik ; Zentralbank ; Simulation ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Benati, Luca
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/153568
• Last update: 10.03.2025, 11:43 AM CET