Arbeitspapier
Revisiting the Great Moderation: policy or luck?
We investigate the relative roles of monetary policy and shocks in causing the Great Moderation, using indirect inference where a DSGE model is tested for its ability to mimic a VAR describing the data. A New Keynesian model with a Taylor Rule and one with the Optimal Timeless Rule are both tested. The latter easily dominates, whether calibrated or estimated, implying that the Fed's policy in the 1970s was neither inadequate nor a cause of indeterminacy; it was both optimal and essentially unchanged during the 1980s. By implication it was largely the reduced shocks that caused the Great Moderation - among them monetary policy shocks the Fed injected into inflation.
- Language
-
Englisch
- Bibliographic citation
-
Series: Cardiff Economics Working Papers ; No. E2012/9 [rev.]
- Classification
-
Wirtschaft
Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
Monetary Policy
Central Banks and Their Policies
- Subject
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Great Moderation
Causes
Indirect inference
Test
Wald statistics
- Event
-
Geistige Schöpfung
- (who)
-
Minford, Patrick
Ou, Zhirong
Wickens, Michael
- Event
-
Veröffentlichung
- (who)
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Cardiff University, Cardiff Business School
- (where)
-
Cardiff
- (when)
-
2014
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Minford, Patrick
- Ou, Zhirong
- Wickens, Michael
- Cardiff University, Cardiff Business School
Time of origin
- 2014
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