Monetary policy, inflation and unemployment. In Defense of the Federal Reserve

Nicolas Groshenny

No 676, 2010 Meeting Papers from Society for Economic Dynamics

Abstract: a model-consistent measure of the unemployment gap. The historical decomposition of the unemployment gap emphasizes the expansionary effects of monetary policy shocks during each of the three recessions that characterize the period. In a counterfactual experiment where the estimated historical monetary policy shocks are turned off, the U.S. economy enters in deflation in 2002 and 2008. Moreover the unemployment gap becomes significantly more volatile. These results suggest that monetary policy shocks did contribute greatly to enhance macroeconomic stability during the last decade.

Date: 2010
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Related works:
Journal Article: MONETARY POLICY, INFLATION AND UNEMPLOYMENT: IN DEFENSE OF THE FEDERAL RESERVE (2013)
Working Paper: MONETARY POLICY, INFLATION AND UNEMPLOYMENT: IN DEFENSE OF THE FEDERAL RESERVE (2013)
Working Paper: Monetary Policy, Inflation and Unemployment In Defense of the Federal Reserve (2010)
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