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The Long-Run Effects of Monetary Policy

Oscar Jorda (), Sanjay Singh () and Alan Taylor ()

No 26666, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Is the effect of monetary policy on the productive capacity of the economy long lived? Yes, in fact we find such impacts are significant and last for over a decade based on: (1) merged data from two new international historical databases; (2) identification of exogenous monetary policy using the macroeconomic trilemma; and (3) improved econometric methods. Notably, the capital stock and total factor productivity (TFP) exhibit hysteresis, but labor does not. Money is non-neutral for a much longer period of time than is customarily assumed. A New Keynesian model with endogenous TFP growth can reconcile all these empirical observations.

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-dge, nep-fdg, nep-mac and nep-mon
Note: DAE EFG IFM ME
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Working Paper: The Long-Run Effects of Monetary Policy (2020) Downloads
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