Tests of Equilibrium Macroeconomics Using Contemporaneous Monetary Data
This paper uses contemporaneous monetary data to carry out econometric tests of the "equilibrium" approach to modeling the relation between monetary disturbances and macroeconomic fluctuations. The theoretical analysis introduces into an equilibrium macroeconomic model the availability of preliminary data on current monetary aggregates and the process of accumulation of revised monetary data. The econometric analysis tests two hypotheses derived from this extended model. One hypothesis concerns the neutrality of perceived monetary policy. The other hypothesis concerns the nonneutrality of errors in preliminary monetary data. The econometric results imply rejection of both of these hypotheses. These tests provide strong evidence against the reality of the equilibrium approach.
|Date of creation:||Oct 1981|
|Date of revision:|
|Publication status:||published as Boschen, John F. and Grossman, Herschel I. "Tests of Equilibrium Macroeconomics Using Contemporaneous Monetary Data." Journal of Monetary Economics, Vol. 10 (1982), pp. 309-333.|
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- 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.
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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.
- Robert J. Barro & Mark Rush, 1980.
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in: Rational Expectations and Economic Policy, pages 23-73
National Bureau of Economic Research, Inc.
- King, Robert G., 1981. "Monetary information and monetary neutrality," Journal of Monetary Economics, Elsevier, vol. 7(2), pages 195-206.
- John F. Boschen & Herschel I. Grossman, 1980. "Monetary Information and Macroeconomic Fluctuations," NBER Working Papers 0498, National Bureau of Economic Research, Inc.
- 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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