TY  - JOUR
AU  - West,Kenneth D.
TI  - On the Interpretation of Near Random-Walk Behavior in GNP
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2364
PY  - 1989
Y2  - July 1989
UR  - http://www.nber.org/papers/w2364
L1  - http://www.nber.org/papers/w2364.pdf
N1  - Author contact info:
Kenneth D. West
Department of Economics
University of Wisconsin
1180 Observatory Drive
Madison, WI  53706
Tel: 608/262-0033
Fax: 608/262-2033
E-Mail: kdwest@wisc.edu
AB  - It is shown that GNP will have an autoregressive root very close to unity in a variant of Taylor's (1980a,b) overlapping wage contracts model, for stylized versions of simple money supply rules and plausible values for the model's parameters. In this variant, monetary policy is the only reason for serial correlation in GNP. It is premature, therefore, to conclude, as some authors, have, that the presence of such a root in U.S. GNP is inconsistent with either a stationary natural rate or with nominal shocks playing a major role in the business cycle.
ER  -