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Embodied Technology and Monetary Shocks; Lumps, Bumps, and Humps

  • John D. Stiver

    (University of Connecticut)

VAR analysis of monetary shocks suggest that an unanticipated, positive money shocks cause a drop in nominal interest rates, and increases in output, consumption, prices, and wages. Further, impulse responses indicate a "hump shaped" pattern with the maximum effect felt 1-2 years after the initial shock. Limited participation models can replicate the contemporaneous correlations of money shocks, but have difficulty with the longer run dynamics. This paper integrates a limited participation framework in a vintage capital model in an attempt to strengthen the monetary transmission mechanism.

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Paper provided by University of Connecticut, Department of Economics in its series Working papers with number 2003-33.

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Length: 33 pages
Date of creation: Jun 2003
Date of revision:
Handle: RePEc:uct:uconnp:2003-33
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  1. Bahk, Byong-Hong & Gort, Michael, 1993. "Decomposing Learning by Doing in New Plants," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 561-83, August.
  2. Stockman, Alan C., 1981. "Anticipated inflation and the capital stock in a cash in-advance economy," Journal of Monetary Economics, Elsevier, vol. 8(3), pages 387-393.
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