When is monetary policy effective?

John Ammer and Allan Brunner ()
Additional contact information
John Ammer: https://www.federalreserve.gov/econres/john-ammer.htm

No 520, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: In this paper, we investigate a number of issues that have not been completely addressed in previous studies regarding the possible asymmetric effects of monetary policy. Overall, we interpret our results as weak evidence in favor of sticky-wage and sticky-price theories and strong evidence against credit-rationing theories. First, we find that models that allow for asymmetries with respect to contractionary/expansionary monetary policy fit the data better than models that allow for asymmetries associated with the state of the business cycle. Second, we find that contractionary monetary policy shocks have a much larger effect on output than expansionary policy shocks, although this result is somewhat sensitive to the econometric specification. Finally, we find that monetary policy shocks that occur during economic expansions appear to have about the same effect as shocks that occur during recessions; this result is robust to various econometric specifications.

Keywords: Monetary policy; Monetary theory (search for similar items in EconPapers)
Date: 1995
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.federalreserve.gov/pubs/ifdp/1995/520/default.htm (text/html)
http://www.federalreserve.gov/pubs/ifdp/1995/520/ifdp520.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:520

Access Statistics for this paper

More papers in International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().