Asymmetric Effects of Positive and Negative Money-Supply Shocks
James Peery Cover
University of Alabama - Department of Economics, Finance and Legal Studies
March, 23 2012
Quarterly Journal of Economics, Vol. 107, No. 4, 1992
This paper examines whether positive and negative money-supply shocks have symmetric effects on output. The results are consistent with the hypothesis that positive money-supply shocks do not have an effect on output, while negative money-supply shocks do have an effect on output. This finding is independent of whether or not expected money is assumed to affect output. The results reported in this paper imply that the Fed could increase the growth rate of real output by
reducing the standard deviation of unexpected changes in the money supply.
Keywords: Anticipated and Unanticipated Money, Money supply shocks
JEL Classification: E32, E52Accepted Paper Series
Date posted: March 26, 2012
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