Does money matter in shaping domestic business cycles? An international investigation

Fabio Canova and Tobias Menz

No 8107, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the contribution of money to business cycle fluctuations in the US, the UK, Japan, and the Euro area using a small scale structural monetary business cycle model. Constrained likelihood-based estimates of the parameters are provided and time instabilities analyzed. Real balances are statistically important for output and inflation fluctuations. Their contribution changes over time. Models giving money no role provide a distorted representation of the sources of cyclical fluctuations, of the transmission of shocks and of the events of the last 40 years.

Keywords: Business cycles; Inflation dynamics; Money; Shock transmission (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Date: 2010-11
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Citations: View citations in EconPapers (4)

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Journal Article: Does Money Matter in Shaping Domestic Business Cycles? An International Investigation (2011)
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