Output Fluctuations and Monetary Shocks
AbstractUsing annual data for Colombia over the last thirty years and a new battery of econometric techniques, we test opposing theories that explain macroeconomic fluctuations: The neoclassical synthesis, which posits that, in the presence of temporary price rigidity, an unanticipated monetary expansion produces output gains that erode over time with increases in the price level; and an alternative explanation, which focuses on “real” technological or preference shocks as the sources of output changes. The coefficients from these systems are used to examine two basic propositions: the long-run neutrality of nominal quantities with respect to permanent movements in the money stock; and the short-run sensitivity of output to inflation.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 91/35.
Date of creation: 01 Mar 1991
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Other versions of this item:
- F3 - International Economics - - International Finance
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
- E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
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