Abstract

http://ssrn.com/abstract=227216
 
 

References (37)



 
 

Citations (145)



 
 

Footnotes (29)



 


 



Does Monetary Policy Matter? a New Test in the Spirit of Friedman and Schwartz


Christina D. Romer


University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER)

David H. Romer


University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER)

February 1990

NBER Working Paper No. w2966

Abstract:     
This paper uses the historical record to isolate episodes in which there were large monetary disturbances not caused by output fluctuations. It then tests whether these monetary changes have important real effects. The central part of the paper is a study of postwar U.S. monetary history. We identify six episodes in which the Federal Reserve in effect decided to attempt to create a recession to reduce inflation. We find that a shift to anti-inflationary policy led, on average, to a rise in the unemployment rate of two percentage points, and that this effect is highly statistically significant and robust to a variety of changes in specification. We reach three other major conclusions. First, the real effects of these monetary disturbances are highly persistent. Second, the six shocks that we identify account for a considerable fraction of postwar economic fluctuations. And third, evidence from the interwar era also suggests that monetary disturbances have large real effects.

Number of Pages in PDF File: 59

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Date posted: August 25, 2000  

Suggested Citation

Romer, Christina D. and Romer, David H., Does Monetary Policy Matter? a New Test in the Spirit of Friedman and Schwartz (February 1990). NBER Working Paper No. w2966. Available at SSRN: http://ssrn.com/abstract=227216

Contact Information

Christina D. Romer (Contact Author)
University of California, Berkeley - Department of Economics ( email )
549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-642-4317 (Phone)
510-642-6615 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
David H. Romer
University of California, Berkeley - Department of Economics ( email )
549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-642-0822 (Phone)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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References:  37
Citations:  145
Footnotes:  29

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