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The Liquidity Effect and Long-Run Neutrality / Ben S. Bernanke, Ilian Mihov.
- Format:
- Book
- Author/Creator:
- Bernanke, Ben S.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w6608.
- NBER working paper series no. w6608
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1998.
- Summary:
- The propositions that monetary expansion lowers short-term nominal interest rates (the liquidity effect), and that monetary policy does not have long-run real effects (long-run neutrality), are widely accepted, yet to date the empirical evidence for both is mixed. We reconsider both propositions simultaneously in a structural VAR context, using a model of the market for bank reserves due to Bernanke and Mihov (forthcoming). We find little basis for rejecting either the liquidity effect or long-run neutrality. Our results are robust over the space of admissible model parameter values, and to the use of long-run rather than short-run identifying restrictions.
- Notes:
- Print version record
- June 1998.
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