Would the Bundesbank have prevented the Great Inflation in the United States?
Luca Benati ()
Journal of Economic Dynamics and Control, 2011, vol. 35, issue 7, 1106-1125
Policy counterfactuals based on estimated structural VARs routinely suggest that bringing Alan Greenspan back in the 1970s United States would not have prevented the Great Inflation. We show that a standard policy counterfactual suggests that the Bundesbank--which is near-universally credited for sparing West Germany the Great Inflation--would also not have been able to prevent the Great Inflation in the United States. The implausibility of this result sounds a cautionary note on taking the outcome of SVAR-based policy counterfactuals at face value, and raises questions on the reliability of such exercises.
Keywords: Bayesian; VARs; Time-varying; parameters; Stochastic; volatility; Identified; VARs; Great; Inflation; Policy; counterfactuals (search for similar items in EconPapers)
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Working Paper: Would the Bundesbank have prevented the Great Inflation in the United States? (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:35:y:2011:i:7:p:1106-1125
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