On the asymmetric effects of money-supply shocks: international evidence from a panel of OECD countries

Georgios Karras and Houston Stokes ()

Applied Economics, 1999, vol. 31, issue 2, 227-235

Abstract: We examine whether the asymmetric effect of money on output is an international phenomenon, and investigate the reasons for this asymmetry. Quarterly data from the 1963-93 period for a panel of twelve OECD countries strongly support asymmetry internationally: negative money-supply shocks are shown to have a stronger effect on output than positive shocks. Our methodology also enables us to distinguish between two sets of theories consistent with the output asymmetries: a convex aggregate supply and a credit view. We find that the effects of money on prices are generally symmetric, which may be consistent with both sets of theories being operative at once.

Date: 1999
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DOI: 10.1080/000368499324453

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