TY  - JOUR
AU  - Ball,Laurence
AU  - Croushore,Dean
TI  - Expectations and the Effects of Monetary Policy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5344
PY  - 1995
Y2  - November 1995
UR  - http://www.nber.org/papers/w5344
L1  - http://www.nber.org/papers/w5344.pdf
N1  - Author contact info:
Laurence M. Ball
Department of Economics
Johns Hopkins University
Baltimore, MD 21218
Tel: 410/516-7605
Fax: 410/516-7600
E-Mail: lball@jhu.edu

Dean Croushore
Robins School of Business
1 Gateway Road
University of Richmond, VA   23173
Tel: 804-287-1961
Fax: 804-289-8878
E-Mail: dcrousho@richmond.edu
AB  - This paper examines the predictive power of shifts in monetary policy, as measured by changes in the federal funds rate, for output, inflation, and survey expectations of these variables.  We find that policy shifts have larger effects on actual output than on expected output, suggesting that agents underestimate the effects of policy on aggregate demand.  Our results help to explain the real effects of monetary policy, and they provide a strong rejection of the rational expectations hypothesis.
ER  -