Does money matter in shaping domestic business cycles? : an international investigation
Title: Does money matter in shaping domestic business cycles? : an international investigation
Citation: Journal of money, credit and banking, 2011, Vol. 43, No. 4, pp. 577-607
ISSN: 0022-2879; 1538-4616
We study the contribution of money to business-cycle fluctuations in the United States, the United Kingdom, Japan, and the euro area using a small-scale structural monetary business cycle model. Constrained likelihood-based estimates of the parameters are provided and time instabilities analyzed. Real balances are statistically important for output and inflation fluctuations. Their contribution changes over time. Models giving money no role provide a distorted representation of the sources of cyclical fluctuations, of the transmission of shocks, and of the events of the last 40 years.
First published online: 18 May 2011
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