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The Effects of Monetary Policy Shocks: Evidence from the Flow of Funds
Lawrence J. Christiano, Martin Eichenbaum and Charles Evans
The Review of Economics and Statistics
Vol. 78, No. 1 (Feb., 1996), pp. 16-34
Published by: The MIT Press
Stable URL: http://www.jstor.org/stable/2109845
Page Count: 19
You can always find the topics here!Topics: Monetary policy, Price shocks, Financial liabilities, Industrial sectors, Statistical variance, Economic recessions, Contractionary monetary policy, Monetary liabilities, Commodity prices, Business structures
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This paper assesses the impact of a monetary policy shock on the U.S. economy. Our measures of contractionary monetary policy shocks are associated with (i) a fall in various monetary aggregates and a rise in the federal funds rate, (ii) declines in different measures of real activity, (iii) sharp declines in commodity prices and a delayed decline in the GDP price deflator. In addition, net funds raised by the business sector increases for roughly a year, after which it falls. Finally, we find that households do not adjust their financial assets and liabilities for several quarters after a monetary shock.
The Review of Economics and Statistics © 1996 The MIT Press