Endogenous Money or Sticky Prices?

Peter Ireland ()

No 499, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: What explains the correlations between nominal and real variables in the postwar US data? Are these correlations indicative of significant nominal price rigidity? Or do they simply reflect the particular way that monetary policymakers react to developments in the real economy? To answer these questions, this paper uses maximum likelihood to estimate a model of endogenous money. This model allows, but does not require, nominal prices to be sticky. The results show that nominal price rigidity, over and above endogenous money, plays an important role in accounting for key features of the data.

Keywords: Endogenous money; Sticky Prices; Business Cycles (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Date: 2001-06-18
Note: This paper has also been published as NBER WP 9390.
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Working Paper: Endogenous Money or Sticky Prices? (2002)
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Persistent link: http://EconPapers.repec.org/RePEc:boc:bocoec:499

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