Money and Income: Post Hoc Ergo Propter Hoc?
TL;DR: An ultra-Keyniesian model, 303 as discussed by the authors, and a Friedman model, 310, were used to compare timing implications, and they showed that timing implications are strongly correlated.
Abstract: An ultra-Keyniesian model, 303. — A Friedman model, 310. — Comparisons of timing implications, 314.
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3,101 citations
TL;DR: In this article, the size of the multiplier in a dynamic, stochastic, general equilibrium model was investigated and it was shown that the multiplier effect is substantially larger than one when the zero lower bound on the nominal interest rate binds.
Abstract: We argue that the government-spending multiplier can be much larger than one when the zero lower bound on the nominal interest rate binds. The larger the fraction of government spending that occurs while the nominal interest rate is zero, the larger the value of the multiplier. After providing intuition for these results, we investigate the size of the multiplier in a dynamic, stochastic, general equilibrium model. In this model the multiplier effect is substantially larger than one when the zero bound binds. Our model is consistent with the behavior of key macro aggregates during the recent financial crisis.
1,798 citations
TL;DR: This article reviewed existing theory and evidence on the effects of monetary policy and presented new evidence, based on multivariate time series studies of several countries, and found that certain patterns in the data consistent with effective monetary policy are strikingly similar across countries.
1,630 citations
01 Jan 1996
TL;DR: This paper used a single time frame and data set to present and analyze the results that have emerged from the recent empirical literature on the effects of monetary policy, using statistical methods that allow the analysis of larger models than appear previously in this literature.
Abstract: This paper uses a single time frame and data set to present and analyze the results that have emerged from the recent empirical literature on the effects of monetary policy. It uses statistical methods that allow the analysis of larger models than appear previously in this literature. Monetary policy actions are shown to be largely systematic responses to the state of the economy. Consequently, there is more uncertainty about the effects of monetary policy than might be thought on the basis of simple graphical or narrative approaches to assessing the evidence. JEL Classifications: E3, E4, E5 1996 by THE BROOKINGS INSTITUTION. This document may be freely reproduced for educational and research purposes provided that i) this copyright notice is included with each copy, ii) no changes are made in the document, and iii) copies are not sold, but retained for individual use or distributed free. 1 Indiana University, Yale University, and Federal Reserve Bank of Atlanta, respectively. A draft of this paper is available by ftp from ftp://ftp.econ.yale.edu/pub/sims/bpea or by http from http://ezinfo.ucs.indiana.edu/~eleeper/home.htm. The authors would like to acknowledge what they have learned about the implementation of monetary policy from conversations with Lois Berthaume, Will Roberds, and Mary Rosenbaum of the Atlanta Fed, Charles Steindel of the New York Fed, Marvin Goodfriend of the Richmond Fed, and Sheila Tschinkel. David Petersen of the Atlanta Fed helped both in locating data and in discussions of the operation of the money markets.
1,148 citations
TL;DR: In this article, an empirical comparison of the standard explanation of the bivariate correlation of money and income with two alternatives, the credit view, which focuses on financial market imperfections rather than real-nominal confusion, was made.
974 citations