Output Fluctuations and Monetary Shocks: Evidence From Colombia
Summary:
Using annual data for Colombia over the last thirty years and a new battery of econometric techniques, we test opposing theories that explain macroeconomic fluctuations: The neoclassical synthesis, which posits that, in the presence of temporary price rigidity, an unanticipated monetary expansion produces output gains that erode over time with increases in the price level; and an alternative explanation, which focuses on “real” technological or preference shocks as the sources of output changes. The coefficients from these systems are used to examine two basic propositions: the long-run neutrality of nominal quantities with respect to permanent movements in the money stock; and the short-run sensitivity of output to inflation.
Series:
Working Paper No. 1991/035
Subject:
Exchange rates Foreign exchange Inflation Labor Monetary base Money Prices Real exchange rates Wages
Notes:
Also published in Staff Papers, Vol. 38, No. 4, December 1991.
English
Publication Date:
March 1, 1991
ISBN/ISSN:
9781451978353/1018-5941
Stock No:
WPIEA0351991
Pages:
34
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