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Modeling Money / Lawrence J. Christiano, Martin Eichenbaum, Charles L. Evans.
- Format:
- Book
- Author/Creator:
- Christiano, Lawrence J.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w6371.
- NBER working paper series no. w6371
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1998.
- Summary:
- We develop and implement a limited information diagnostic strategy for assessing the plausibility of monetary business cycle models. Our strategy focuses on a model's ability to reproduce empirical estimates of an actual economy's response to monetary policy shocks. A key input to this diagnostic is a univariate time series representation of the response of money to a shock in monetary policy. We find that a monetary policy shock has only a small contemporaneous effect on the monetary base and M1. Its primary effect is to signal future movements in the money supply. We implement our diagnostic strategy on a limited participation model of money which stresses the importance of credit market frictions in the monetary transmission mechanism.
- Notes:
- Print version record
- January 1998.
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