The long-run effects of monetary policy

Oscar Jorda, Sanjay Singh and Alan Taylor

No 14338, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We document that the real effects of monetary shocks last for over a decade. Our approach relies on (1) identification of exogenous and non-systematic monetary shocks using the trilemma of international finance; (2) merged data from two new international historical cross-country databases; and (3) econometric methods robust to long-horizon inconsistent estimates. Notably, the capital stock and total factor productivity (TFP) exhibit greater hysteresis than labor. When we allow for asymmetry, we find these effects with tightening shocks, but not with loosening shocks. When extending the horizon of the responses reported in several recent studies that use alternative monetary shocks, we find similarly persistent real effects, thus supporting our main findings.

Keywords: Monetary policy; Money neutrality; Hysteresis; Trilemma; Instrumental vari- ables; Local projections (search for similar items in EconPapers)
JEL-codes: E01 E30 E32 E44 E47 E51 F33 F42 F44 (search for similar items in EconPapers)
Date: 2020-01
New Economics Papers: this item is included in nep-fdg, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (100)

Downloads: (external link)
https://cepr.org/publications/DP14338 (application/pdf)

Related works:
Working Paper: The Long-Run Effects of Monetary Policy (2020)
Working Paper: The Long-Run Effects of Monetary Policy (2020)
Working Paper: The Long-Run Effects of Monetary Policy (2019)
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:cpr:ceprdp:14338

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP14338

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().