What explains the varying monetary response to technology shocks in G-7 countries?

Neville Francis, Michael Owyang and Athena T. Theodorou

No 2004-002, Working Papers from Federal Reserve Bank of St. Louis

Abstract: In a recent paper, Gal, Lpez-Salido, and Valls (2003) examined the Federal Reserve?s response to VAR-identified technology shocks. They found that during the Martin-Burns- Miller era, the Fed responded to technology shocks by overstabilizing output, while in the Volcker-Greenspan era, the Fed adopted an inflation-targeting rule. We extend their analysis to countries of the G-7; moreover, we consider the factors that may contribute to differing monetary responses across countries. Specifically, we find a relationship between the volatility of capital investment, type of monetary policy rule, the responsiveness of the rule to output and inflation fluctuations, and the response to technology shocks.

Keywords: Technology; Monetary policy; Taylor's rule (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac and nep-mon
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Citations: View citations in EconPapers (19)

Published in International Journal of Central Banking, December 2005, 1(3), pp. 33-71

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Related works:
Journal Article: What Explains the Varying Monetary Response to Technology Shocks in G-7 Countries? (2005)
Working Paper: What Explains the Varying Monetary Response to Technology Shocks in G-7 Countries? (2005)
Working Paper: What Explains the Varying Monetary Response to Technology SHocks in G7-Countries (2004)
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DOI: 10.20955/wp.2004.002

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