The Neo-Fisher Effect: Econometric Evidence from Empirical and Optimizing Models

Martín Uribe ()

No 25089, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper investigates whether permanent monetary tightenings increase inflation in the short run. It estimates, using U.S. data, an empirical and a New-Keynesian model driven by transitory and permanent monetary and real shocks. Temporary increases in the nominal interest-rate lead, in accordance with conventional wisdom, to a decrease in inflation and output and an increase in real rates. The main result of the paper is that permanent increases in the nominal interest rate lead to an immediate increase in inflation and output and a decline in real rates. Permanent monetary shocks explain more than 40 percent of inflation changes.

JEL-codes: E52 E58 (search for similar items in EconPapers)
Date: 2018-09
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac and nep-mon
Note: EFG ME
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Citations: View citations in EconPapers (32)

Published as Martín Uribe, 2022. "The Neo-Fisher Effect: Econometric Evidence from Empirical and Optimizing Models," American Economic Journal: Macroeconomics, vol 14(3), pages 133-162.

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