The Effects of Monetary Policy Shocks: Evidence from the Flow of Funds

Lawrence Christiano, Martin Eichenbaum and Charles Evans

The Review of Economics and Statistics, 1996, vol. 78, issue 1, 16-34

Abstract: This paper assesses the impact of a monetary policy shock on the U.S. economy. The authors' measures of contractionary monetary policy shocks are associated with a fall in various monetary aggregates and a rise in the federal funds rate, declines in different measures of real activity, and sharp declines in commodity prices and a delayed decline in the GDP price deflator. In addition, net funds raised by the business sector increases for roughly a year, after which it falls. Finally, the authors find that households do not adjust their financial assets and liabilities for several quarters after a monetary shock. Copyright 1996 by MIT Press.

Date: 1996
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Journal Article: The effects of monetary policy shocks: evidence from the flow of funds (1994)
Working Paper: The effects of monetary policy shocks: evidence from the Flow of Funds (1994)
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