Accounting for Busines Cycles in Canada: II. The Role of Money
MPRA Paper from University Library of Munich, Germany
I have explained business cycles in Canada focusing on the role of money. To do that, I have used both empirical and theoretical models. The empirical investigations include performing causality tests and computing impulse responses based on structural and co-integrated vector autoregressive models. The theoretical models consist of RBC and new-Keynesian models. Some of these theoretical models are: the inflation tax, the inflation and tax code, the sticky price, and the financial accelerator models. The empirical models indicate monetary disturbances are instrumental in business cycle fluctuations but do not necessarily cause them. The theoretical models also point out that monetary disturbances contribute to business cycle fluctuations but not as much as technological change. Some channels through which they propagate are: nominal capital gain tax, price stickiness, and deteriorating financial conditions. Price stickiness turns out to play a major r
Keywords: Business Cycles; Macroeconomics; Monetary Policy; Sticky Prices; Vector Autoregression; Vector Error Correction. (search for similar items in EconPapers)
JEL-codes: E31 E32 E37 E52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-mac and nep-mon
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