U.S. Evidence on Linear Feedback from Money Growth Shocks to Relative Price Changes, 1954 to 1979

Evidence is provided on the allocative effects of monetary policy by estimating the extent to which money growth shocks affected individual relative prices from 1954 to 1979. Building on Geweke's (1982) feedback measure, the paper presents estimates of monetary feedback decomposed by frequency...

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Bibliographic Details
Published in:The review of economics and statistics 1985-11, Vol.67 (4), p.675-680
Main Author: McGarvey, Mary G.
Format: Article
Language:English
Subjects:
Average prices
Business expansion
Consumer prices
Customer feedback
Economic fluctuations
Feedback
Growth
Monetary policy
Monetary theory
Money supply
Point estimators
Price level changes
Price shocks
Relative prices
Statistical analysis
Statistical variance
Wholesale trade
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Summary:Evidence is provided on the allocative effects of monetary policy by estimating the extent to which money growth shocks affected individual relative prices from 1954 to 1979. Building on Geweke's (1982) feedback measure, the paper presents estimates of monetary feedback decomposed by frequency to allow monetary policy's short-run effects to differ from its longer-run effects. The results suggest that monetary feedback from 1954 to 1970 differs from the latter period in both magnitude and patterns across frequencies. The 1970s data suggest monetary variation had a greater overall effect and this effect was more concentrated at lower frequencies.
ISSN:0034-6535
1530-9142
DOI:10.2307/1924813