Are Supply Shocks Contractionary at the ZLB? Evidence from Utilization-Adjusted TFP Data

Julio Garín, Robert Lester () and Eric Sims ()
Additional contact information
Julio Garín: Claremont McKenna College

The Review of Economics and Statistics, 2019, vol. 101, issue 1, 160-175

Abstract: Abstract The basic New Keynesian model predicts that positive supply shocks are less expansionary at the zero lower bound (ZLB) compared to periods of active monetary policy. We test this prediction empirically using Fernald's (2014) utilization-adjusted total factor productivity series, which we take as a measure of exogenous productivity. In contrast to the predictions of the model, positive productivity shocks are estimated to be more expansionary at the ZLB compared to normal times. We find that there is no significant difference in the response of expected inflation to a productivity shock at the ZLB compared to normal times.

Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
http://www.mitpressjournals.org/doi/pdf/10.1162/rest_a_00723 (application/pdf)
Access to PDF is restricted to subscribers.

Related works:
Working Paper: Are Supply Shocks Contractionary at the ZLB? Evidence from Utilization-Adjusted TFP Data (2016)
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:tpr:restat:v:101:y:2019:i:1:p:160-175

Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=0034-6535

Access Statistics for this article

The Review of Economics and Statistics is currently edited by Pierre Azoulay, Olivier Coibion, Will Dobbie, Raymond Fisman, Benjamin R. Handel, Brian A. Jacob, Kareen Rozen, Xiaoxia Shi, Tavneet Suri and Yi Xu

More articles in The Review of Economics and Statistics from MIT Press
Bibliographic data for series maintained by The MIT Press ().