TY  - JOUR
AU  - Walsh,Carl E.
TI  - The Impact of Monetary Targeting in the United States:  1976-1984
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2384
PY  - 1987
Y2  - September 1987
UR  - http://www.nber.org/papers/w2384
L1  - http://www.nber.org/papers/w2384.pdf
N1  - Author contact info:
Carl Walsh
Department of Economics
E2 Building
University of California
Santa Cruz, CA   95064
Tel: 531-459-4082
E-Mail: walshc@ucsc.edu
AB  - This paper attempts to assess empirically the impact on output and inflation of monetary policy in the U-S. during the period of M1 targeting from 1976 to 1984. The impact of policy shocks on output and inflation, and the impact of aggregate demand, aggregate supply and money demand shocks on M1 and the Fed's target path, are examined through the use of impulse response functions. These response functions are based on an orthogonalization of VAR residuals derived from an estimated structural model. The VAR specification reflects the finding that M1 and the Fed's target for M1 are cointegrated. The evidence suggests that money supply shocks and shocks to M1 target have accounted for little of the observed volatility of output or inflation. However, the induced policy response to aggregate demand and supply shocks has contributed to subsequent inflation.
ER  -