Conference Paper

Putting \\"M\\" back in monetary policy

Abstract: Money demand and the stock of money have all but disappeared from monetary policy analyses. Remarkably, it is more common for empirical work on monetary policy to include commodity prices than to include money. This paper establishes and explores the empirical fact that whether money enters a model and how it enters matters for inferences about policy impacts. The way money is modeled significantly changes the size of output and inflation effects, and the degree of inertia that inflation exhibits following a policy shock. We offer a simple and conventional economic interpretation of these empirical facts.

Keywords: Monetary policy; Interest rates;

Status: Published in Journal of money, credit, and banking, volume 35, no. 6, pt. 2, December 2003

Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Proceedings

Publication Date: 2003

Pages: 1217-1264