Do We Really Know that U.S. Monetary Policy was Destabilizing in the 1970s?
Qazi Haque,
Nicolas Groshenny and
Mark Weder
No 19-11, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics
Abstract:
The paper re-examines whether the Federal Reserves monetary policy was a source of instability during the Great Inflation by estimating a sticky-price model with positive trend inflation, commodity price shocks and sluggish real wages. Our estimation provides empirical evidence for substantial wage-rigidity and finds that the Federal Reserve responded aggressively to inflation but negligibly to the output gap. In the presence of non-trivial real imperfections and well-identified commodity price-shocks, U.S. data prefers a determinate version of the New Keynesian model: monetary policy-induced indeterminacy and sunspots were not causes of macroeconomic instability during the pre-Volcker era.
Pages: 54
Date: 2019
New Economics Papers: this item is included in nep-cba, nep-his, nep-mac and nep-mon
Note: MD5 = b24b4d4a3fbe00474405e52360fa9be8
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)
Downloads: (external link)
https://ecompapers.biz.uwa.edu.au/paper/PDF%20of%2 ... ny%20and%20Weder.pdf (application/pdf)
Related works:
Journal Article: Do we really know that U.S. monetary policy was destabilizing in the 1970s? (2021) 
Working Paper: Do we really know that U.S. monetary policy was destabilizing in the 1970s? (2021)
Working Paper: Do We Really Know that U.S. Monetary Policy was Destabilizing in the 1970s? (2020) 
Working Paper: Do We Really Know that U.S. Monetary Policy was Destabilizing in the 1970s? (2019) 
Working Paper: Do we really know that U.S. monetary policy was destabilizing in the 1970s? (2019) 
Working Paper: Do We Really Know that U.S. Monetary Policy was Destabilizing in the 1970s? (2018) 
Working Paper: Do we really know that US monetary policy was destabilizing in the 1970s? (2018) 
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:uwa:wpaper:19-11
Access Statistics for this paper
More papers in Economics Discussion / Working Papers from The University of Western Australia, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sam Tang ().