An “expansionary” monetary policy that increases the growth rate of bank reserves is generally believed by policy makers to induce a “liquidity effect”, or a persistent decline in short-term nominal interest rates, that stimulates real activity. Christiano, et al. (1991,1995,1997) have...

This paper estimates the amount by which the effectiveness of monetary policy in changing real output for a given change in interest rates has declined due to the increased size of the federal government debt.

Extending the approach of Bernanke and Blinder (1992), Strongin (1992), and Christano, Eichenbaum, and Evans (1994a, 1994b), we develop and apply a VAR-based methodology for measuring the stance of monetary policy. More specifically, we develop a "demi-structural" VAR approach, which extracts...

This paper examines the dynamic relationship between changes in the funds rate and nonborrowed reserves within a reduced form framework that allows the relationship to have two distinct patterns over time. A regime switching model a la Hamilton (1989) is estimated. The two regimes are different...

The amount of information in the yield curve for forecasting future changes in short rates varies with the maturity of the rates involved. Indeed, spreads between certain long and short rates appear unrelated to future changes in the short rate--contrary to the rational expectations hypothesis...

Recent research has clarified the nature of measurement errors in U.S. price indexes. Changes in the quality of goods create severe problems. Laspeyres-type indexes suffer from substitution bias from one good to another and from one type of outlet to another. Available evidence suggests that the...

This paper describes an empirical framework for analyzing the monetary transmission mechanism through which changes in monetary policy affect real GDP and inflation. The framework reflects the work of a large number of empirical researchers who have built econometric models of the impacts of...

This paper examines the issue of whether differences in money targeting or base-drift procedures between Japan and the U.S. are significant contributing factors to Japan's superior macroeconomic performance over the last decade, and concludes that these procedures probably are not important...

We use vector autoregressions to examine the behavior of the velocities of alternative monetary aggregates, focusing on the role of disinflation and deregulation during the 1980s. By estimating a single system that contains income, prices, interest rates and the components of M3, we are able to...