Would the bundesbank have prevented the great inflation in the United States?

Luca Benati () and Banque de France
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Banque de France: Monetary Policy ResearchDivision - Monetary Policy ResearchDivision

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Abstract: Policy counterfactuals based on estimated structural VARs routinely suggest that bringing Alan Greenspan back in the 1970s' United States would not have prevented the Great Inflation. We show that a standard policy counterfactual suggests that the --which is near-universally credited for sparing West Germany the Great Inflation--would also have been able to prevent the Great Inflation in the United States. The implausibility of this result sounds a cautionary note on taking the outcome of SVAR-based policy counterfactuals at face value, and raises questions on the reliability of such exercises.

Keywords: Bayesian VARs; Time-varying parameters; Stochastic volatility; Identified VARs; Great Inflation; Policy counterfactuals (search for similar items in EconPapers)
Date: 2011-05-14
Note: View the original document on HAL open archive server: https://hal.science/hal-00822061
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Citations: View citations in EconPapers (5)

Published in Journal of Economic Dynamics and Control, 2011, 35 (7), pp.1106. ⟨10.1016/j.jedc.2011.02.002⟩

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Related works:
Journal Article: Would the Bundesbank have prevented the Great Inflation in the United States? (2011)
Working Paper: Would the Bundesbank have prevented the Great Inflation in the United States? (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00822061

DOI: 10.1016/j.jedc.2011.02.002

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