Expectations and the Effects of Monetary Policy

Laurence Ball and Dean Croushore

No 5344, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines the predictive power of shifts in monetary policy, as measured by changes in the federal funds rate, for output, inflation, and survey expectations of these variables. We find that policy shifts have larger effects on actual output than on expected output, suggesting that agents underestimate the effects of policy on aggregate demand. Our results help to explain the real effects of monetary policy, and they provide a strong rejection of the rational expectations hypothesis.

JEL-codes: E3 E5 (search for similar items in EconPapers)
Date: 1995-11
Note: EFG ME
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Citations: View citations in EconPapers (20)

Published as Ball, Laurence and Dean Croushore. "Expectations And The Effects Of Monetary Policy," Journal of Money, Credit and Banking, 2003, v35(4,Aug), 473-484.

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Related works:
Journal Article: Expectations and the Effects of Monetary Policy (2003)
Working Paper: Expectations and the effects of monetary policy (2001)
Working Paper: Expectations and the effects of monetary policy (1998)
Working Paper: Expectations and the effects of monetary policy (1995)
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