Reading the Recent Monetary History of the U.S., 1959-2007
41 Pages Posted: 6 May 2010
Date Written: April 29, 2010
The authors report the results of the estimation of a rich dynamic stochastic general equilibrium model of the U.S. economy with both stochastic volatility and parameter drifting in the Taylor rule. They use the results of this estimation to examine the recent monetary history of the U.S. and to interpret, through this lens, the sources of the rise and fall of the great American inflation from the late 1960s to the early 1980s and of the great moderation of business cycle fluctuations between 1984 and 2007.
Keywords: DSGE models, Stochastic volatility, Parameter drifting, Bayesian methods
JEL Classification: E10, E30, C11
Suggested Citation: Suggested Citation