We study the reliability of the estimated responses of major economic aggregates to monetary policy shocks. We investigate the bias of the estimated impulse response functions and the reliability of their qualitative features such as their sign and shape and the timing of peaks and troughs. We...

This study analyzes the size and power of tests of the null of stationarity against the unit root alternative. Existing evidence is limited to processes with roots between 0 and 0.7. In sharp contrast, virtually all applications of economic interest involve null hypotheses much closer to 1. We...