Dynamic IS curves with and without money: An international comparison

Rik Hafer () and Garett Jones

Journal of International Money and Finance, 2008, vol. 27, issue 4, 609-616

Abstract: When money is added to a dynamic IS model, evidence from six countries indicates that money growth usually helps predict the GDP gap and that the predictive power of a short-term real interest is much weaker than previous work suggests. Thus, for dynamic IS models such as that used by Rudebusch, G.D., Svensson, L.E.O. [1999. Policy rules and inflation targeting. In: Taylor, J.B. (Ed.), Monetary Policy Rules. University of Chicago Press, Chicago, pp. 203-246; 2002. Eurosystem monetary targeting: lessons from US data. European Economic Review 46, 417-442], the omission of money appears to come at a high cost.

Date: 2008
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Citations: View citations in EconPapers (23)

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