European Business Schools Librarian's Group

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 514: Reconsidering the Role of Money for Output, Prices and Interest Rates

Giovanni Favara and Paolo Giordani ()
Additional contact information
Giovanni Favara: International Institute for Economic Studies, Stockholm University
Paolo Giordani: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden

Abstract: 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.

Keywords: New-Keynesian models; LM shocks; VAR; Block-exogeneity

JEL-codes: E31; E52; E58

33 pages, November 19, 2002

Full text files 

hastef0514.pdf PDF-file Full text

Download statistics

Questions (including download problems) about the papers in this series should be directed to Helena Lundin ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:hastef:0514This page generated on 2024-09-13 22:19:41.