Monetary Business Cycle Accounting

Roman Sustek

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the quantitative importance of various types of frictions for inflation and nominal interest rate dynamics by extending business cycle accounting to monetary models. Representing a variety of real and nominal frictions as `wedges' to standard equilibrium conditions allows a quantitative assessment of those frictions. Decomposing the data into movements due to these wedges shows that frictions that are equivalent to wedges in TFP and equilibrium conditions for asset markets are essential. In contrast, wedges in equilibrium conditions for capital accumulation and the resource constraint, and wedges capturing distortionary effects of sticky prices, play only a secondary role.

Keywords: Business cycle accounting; inflation; nominal interest rate (search for similar items in EconPapers)
JEL-codes: E31 E32 E43 E52 (search for similar items in EconPapers)
Date: 2009-09-25
New Economics Papers: this item is included in nep-acc, 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 (13)

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Related works:
Journal Article: Monetary Business Cycle Accounting (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:17518

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