Monetary Information and Macroeconomic Fluctuations
This paper introduces contemporaneously available monetary data into an "equilibrium" model that combines rational expectations, market clearing, and incomplete information about monetary disturbances. Data on the current money stock involve a preliminary estimate that is subject to a subsequent process of gradual revision. The model implies the testable hypothesis that aggregate output and employment are uncorrelated with the contemporaneous measure of money growth implied by the difference between the currently available estimates of current and past money shocks. Rejection of this hypothesis provides strong evidence again at the equilibriums approach to modeling the relation between monetary disturbances and macro-economic fluctuations.
|Date of creation:||Jul 1980|
|Date of revision:|
|Publication status:||published as Boschen, John F. and Herschel I. Grossman. "Monetary Information and Macroeconomic Fluctuations." Modern Macroeconomic Theory, edited by J. P. Fitonssi, New Jersey: Barnes and Noble Books, (1983), pp. 173-184.|
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- Lucas, Robert E, Jr, 1973. "Some International Evidence on Output-Inflation Tradeoffs," American Economic Review, American Economic Association, vol. 63(3), pages 326-34, June.
- Azariadis, Costas, 1978. "Escalator clauses and the allocation of cyclical risks," Journal of Economic Theory, Elsevier, vol. 18(1), pages 119-155, June.
- Robert J. Barro & Zvi Hercowitz, 1979.
"Money Stock Revisions and Unanticipated Money Growth,"
NBER Working Papers
0329, National Bureau of Economic Research, Inc.
- Barro, Robert J. & Hercowitz, Zvi, 1980. "Money stock revisions and unanticipated money growth," Journal of Monetary Economics, Elsevier, vol. 6(2), pages 257-267, April.
- Barro, Robert J., 1976. "Rational expectations and the role of monetary policy," Journal of Monetary Economics, Elsevier, vol. 2(1), pages 1-32, January.
- John F. Boschen & Herschel I. Grossman, 1981.
"Tests of Equilibrium Macroeconomics Using Contemporaneous Monetary Data,"
NBER Working Papers
0558, National Bureau of Economic Research, Inc.
- Boschen, John F. & Grossman, Herschel I., 1982. "Tests of equilibrium macroeconomics using contemporaneous monetary data," Journal of Monetary Economics, Elsevier, vol. 10(3), pages 309-333.
- Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
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