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Author:Christiano, Lawrence J. 

Journal Article
Understanding the fiscal theory of the price level

Price stability is an important goal of public policy. To reach this goal, two key questions must be addressed: How can price stability be achieved? And, how much price stability is desirable? The authors review the fiscal theory of the price level, with special emphasis on its implications for the feasibility and desirability of price stability.
Economic Review , Issue Q II , Pages 2-38

Working Paper
Nominal rigidities and the dynamic effects of a shock to monetary policy

We present a model embodying moderate amounts of nominal rigidities which accounts for the observed inertia in inflation and persistence in output. The key features of our model are those that prevent a sharp rise in marginal costs after an expansionary shock to monetary policy. Of these features, the most important are staggered wage contracts of average duration three quarters, and variable capital utilization.
Working Paper Series , Paper WP-01-08

Money does Granger-cause output in the bivariate output-money relation

A bivariate Granger-causality test on money and output finds statistically significant causality when data are measured in log levels, but not when they are measured in first differences of the logs. Which of these results is right? The answer to that question matters because a finding of no Granger-causality from money to output would substantially embarrass existing business cycle models in which money plays an important role [Eichenbaum and Singleton (1986)]. Monte Carlo simulation experiments indicate that, most probably, the first difference results reflect lack of power, whereas the ...
Staff Report , Paper 108

Optimality of the Friedman rule in economies with distorting taxes

We find conditions for the Friedman rule to be optimal in three standard models of money. These conditions are homotheticity and separability assumptions on preferences similar to those in the public finance literature on optimal uniform commodity taxation. We show that there is no connection between our results and the result in the standard public finance literature that intermediate goods should not be taxed.
Staff Report , Paper 158

Journal Article
Liquidity effects, the monetary transmission mechanism, and monetary policy

Economic Perspectives , Volume 16 , Issue Nov , Pages 2-14

Conference Paper
What is a good macroeconomic model for a central bank to use? panel discussion

Proceedings , Issue Mar

Journal Article
Inflation and monetary policy in the twentieth century

This article characterizes the change in the nature of the money growth-inflation and unemployment-inflation relationships between the first and second halves of the twentieth century. The changes are substantial, and the authors discuss some of the implications for modeling inflation dynamics, notably for models of inflation that say that bad inflation outcomes result from poorly designed monetary policy institutions.
Economic Perspectives , Volume 27 , Issue Q I , Pages 22-45

Working Paper
Firm-specific capital, nominal rigidities and the business cycle

Macroeconomic and microeconomic data paint conflicting pictures of price behavior. Macroeconomic data suggest that inflation is inertial. Microeconomic data indicate that firms change prices frequently. We formulate and estimate a model which resolves this apparent micro - macro conflict. Our model is consistent with post-war U.S. evidence on inflation inertia even though firms re-optimize prices on average once every 1.5 quarters. The key feature of our model is that capital is firm-specific and predetermined within a period.
Working Paper Series , Paper WP-05-01

Journal Article
Why is consumption less volatile than income?

Quarterly Review , Volume 11 , Issue Fall , Pages 2-20

Conference Paper
The Great Depression and the Friedman-Schwartz hypothesis

We evaluate the Friedman-Schwartz hypothesis that a more accommodative monetary policy could have greatly reduced the severity of the Great Depression.


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