Are Supply Shocks Contractionary at the ZLB? Evidence from Utilization-Adjusted TFP Data

Julio Garin, Robert Lester () and Eric Sims

No 22311, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The basic New Keynesian model predicts that positive supply shocks are less expansionary at the zero lower bound (ZLB) compared to periods of active monetary policy. We test this prediction empirically using Fernald's (2014) utilization-adjusted total factor productivity series, which we take as a measure of exogenous productivity. In contrast to the predictions of the model, positive productivity shocks are estimated to be more expansionary at the ZLB compared to normal times. However, in line with the predictions of the basic model, positive productivity shocks have a stronger negative effect on inflation at the ZLB.

JEL-codes: E31 E32 E43 E52 (search for similar items in EconPapers)
Date: 2016-06
New Economics Papers: this item is included in nep-eff, nep-mac, nep-mon and nep-net
Note: EFG ME
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Citations: View citations in EconPapers (5)

Published as Julio Garín & Robert Lester & Eric Sims, 2019. "Are Supply Shocks Contractionary at the ZLB? Evidence from Utilization-Adjusted TFP Data," The Review of Economics and Statistics, vol 101(1), pages 160-175.

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Journal Article: Are Supply Shocks Contractionary at the ZLB? Evidence from Utilization-Adjusted TFP Data (2019)
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