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Monetary business cycle accounting

Record type: Article

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.

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Citation

Šustek, Roman (2011) Monetary business cycle accounting Review of Economic Dynamics, 14, (4), pp. 592-612. (doi:10.1016/j.red.2010.10.001).

More information

e-pub ahead of print date: 14 October 2010
Published date: October 2011
Keywords: business cycle accounting, inflation, nominal interest rate
Organisations: Economics

Identifiers

Local EPrints ID: 203661
URI: http://eprints.soton.ac.uk/id/eprint/203661
ISSN: 1094-2025
PURE UUID: 87808018-659e-4dde-b389-4e5f36bce6fe

Catalogue record

Date deposited: 17 Nov 2011 16:26
Last modified: 18 Jul 2017 11:08

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Contributors

Author: Roman Šustek

University divisions


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