Monetary business cycle accounting

Šustek, Roman (2011) Monetary business cycle accounting. Review of Economic Dynamics, 14, (4), 592-612. (doi:10.1016/


Full text not available from this repository.


This paper investigates the quantitative importance of various types of distortions for inflation and nominal interest rate dynamics by extending business cycle accounting to monetary models. Representing various classes of real and nominal distortions as ‘wedges’ in standard equilibrium conditions allows a quantitative assessment of those distortions. Decomposing the data into movements due to these wedges shows that distortions generating movements in TFP and wedges in equilibrium conditions for asset markets are essential. In contrast, wedges capturing the effects of sticky prices play less important role. These results are robust to alternative implementations of the accounting method.

Item Type: Article
Digital Object Identifier (DOI): doi:10.1016/
ISSNs: 1094-2025 (print)
1096-0929 (electronic)
Keywords: business cycle accounting, inflation, nominal interest rate
Subjects: H Social Sciences > HB Economic Theory
Divisions : Faculty of Social and Human Sciences > Social Sciences > Economics
ePrint ID: 203661
Accepted Date and Publication Date:
October 2011Published
14 October 2010Made publicly available
Date Deposited: 17 Nov 2011 16:26
Last Modified: 31 Mar 2016 13:47

Actions (login required)

View Item View Item