Has Monetary Policy Become More Effective?

Marc Giannoni and Jean Boivin ()

No 5463, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We investigate the implications of changes in the structure of the US economy for monetary policy effectiveness. Estimating a VAR over the pre- and post-1980 periods, we provide evidence of a reduced effect of monetary policy shocks in the latter period. We estimate a structural model that replicates well the economy's response in both periods, and perform counterfactual experiments to determine the source of the change in the monetary transmission mechanism and in the economy's volatility. We find that by responding more strongly to inflation expectations, monetary policy has stabilized the economy more effectively in the post-1980 period.

Keywords: Transmission of monetary policy; Minimum distance estimation; Habit formation; Vector autoregression; Dynamic general equilibrium model; Indeterminacy (search for similar items in EconPapers)
JEL-codes: C32 E3 E52 (search for similar items in EconPapers)
Date: 2006-01
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (615)

Downloads: (external link)
https://cepr.org/publications/DP5463 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Has Monetary Policy Become More Effective? (2003)
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:cpr:ceprdp:5463

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP5463

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().