IDEAS home Printed from
   My bibliography  Save this article

Planning Output Dynamics with Memory


  • Michele Caputo


We show that, because of the memory, the output after monetary changes follows as a dynamic hump-shaped path similar as that obtained in the structural VAR literature. We study then the variation caused by two consecutive monetary changes with the same sign and amount and compare it with the case of a single change with double amplitude finding that in the short range the effect of the double amplitude is larger while in the long range is true the opposite implying that a sequence of changes with limited amplitude has the advantage of testing the system with smaller risk without compromising the final result. Finally, the case of two step variations of monetary policy with opposite amounts is considered for the circumstance when a first monetary change does not give the desired result and it is needed to go back to the previous monetary condition; we find that their total effects are reversible only asymptotically, but in a relatively short time the total effect may be negligible. The theory may be applied also to the effect generated by shocks other than monetary changes as a sudden economic development or an international crisis. A first tentative test with the reaction of a market to a shock confirms the theory of the paper, however other tests with data fit to the theory would be required.

Suggested Citation

  • Michele Caputo, 2009. "Planning Output Dynamics with Memory," Economia politica, Società editrice il Mulino, issue 1, pages 85-104.
  • Handle: RePEc:mul:jb33yl:doi:10.1428/29093:y:2009:i:1:p:85-104

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers

    File URL:
    Download Restriction: no

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mul:jb33yl:doi:10.1428/29093:y:2009:i:1:p:85-104. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.