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Monetary Policy Shocks: What Have We Learned and to What End?

  • Lawrence J. Christiano
  • Martin Eichenbaum
  • Charles L. Evans

This paper reviews recent research that grapples with the question: What happens after an exogenous shock to monetary policy? We argue that this question is interesting because it lies at the center of a particular approach to assessing the empirical plausibility of structural economic models that can be used to think about systematic changes in monetary policy institutions and rules. The literature has not yet converged on a particular set of assumptions for identifying the effects of an exogenous shock to monetary policy. Nevertheless, there is considerable agreement about the qualitative effects of a monetary policy shock in the sense that inference is robust across a large subset of the identification schemes that have been considered in the literature. We document the nature of this agreement as it pertains to key economic aggregates.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6400.

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Date of creation: Feb 1998
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Publication status: Published as "The Effects of Monetary Policy Shocks: Evidence from the Flow of Funds", Review of Economics and Statistics, Vol. 78, no. 1(February 1996): 16-34.
Handle: RePEc:nbr:nberwo:6400
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  1. Advanced Monetary Theory and Policy (ECON 447)

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