Are Supply Shocks Contractionary at the ZLB? Evidence from Utilization-Adjusted TFP Data / Julio Garín, Robert Lester, Eric Sims.

Format:

Book

Author/Creator:

Garín, Julio.

Contributor:

National Bureau of Economic Research.

Lester, Robert.

Sims, Eric.

Series:

Working Paper Series (National Bureau of Economic Research) no. w22311.

NBER working paper series no. w22311

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

The basic New Keynesian model predicts that positive supply shocks are less expansionary at the zero lower bound (ZLB) compared to periods of active monetary policy. We test this prediction empirically using Fernald's (2014) utilization-adjusted total factor productivity series, which we take as a measure of exogenous productivity. In contrast to the predictions of the model, positive productivity shocks are estimated to be more expansionary at the ZLB compared to normal times. However, in line with the predictions of the basic model, positive productivity shocks have a stronger negative effect on inflation at the ZLB.

Notes:

Print version record

June 2016.