On the Interdependence of Business Cycles and Economic Growth: The Case of Growth Hysteresis
AbstractThe purpose of this paper is to give an empirical answer to two related but different questions: First, are economic growth and business cycles interdependent? Second, is money neutral even in the long run? Using data from the United States, this paper finds (using a VAR model) and presents evidence for the interdependence hypothesis, and against the long-run money neutrality hypothesis. The results suggest that counter- cyclical growth models best capture the main channel of influence between cycles and growth. A policy implication is that, if money affects the cycle, it is not neutral even in the long run, and a positive monetary shock may result in hysteresis, having negative growth consequences.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by EconWPA in its series Development and Comp Systems with number 0509015.
Length: 23 pages
Date of creation: 15 Sep 2005
Date of revision:
Note: Type of Document - doc; pages: 23
Contact details of provider:
Web page: http://184.108.40.206
Business Cycles; Growth; Money Neutrality;
Find related papers by JEL classification:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-09-29 (All new papers)
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA).
If references are entirely missing, you can add them using this form.