Reconsidering the role of money for output, prices and interest rates

Arbeitspapier

New Keynesian models of monetary policy assign no role to monetary aggregates, in the sense that the level of output, prices, and interest rates can be determined without knowledge of the quantity of money. We evaluate the empirical validity of this prediction by studying the effects of shocks to monetary aggregates using an identified VAR. Shocks to monetary aggregates are isolated by means of identifying restrictions suggested by this class of models. Contrary to the theoretical predictions, shocks to broad monetary aggregates have substantial and persistent effects on output and prices.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SSE/EFI Working Paper Series in Economics and Finance ; No. 514

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Monetary Policy ; Central Banks and Their Policies
• Subject: New-Keynesian models ; LM shocks ; VAR ; Block-exogeneity ; Neukeynesianische Makroökonomik ; Produktion ; Preis ; Zins ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Favara, Giovanni ; Giordani, Paolo
• Event: Veröffentlichung
• (who): Stockholm School of Economics, The Economic Research Institute (EFI)
• (where): Stockholm
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/56258
• Last update: 10.03.2025, 11:43 AM CET