NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Modeling Money

Lawrence J. Christiano, Martin Eichenbaum, Charles L. Evans

NBER Working Paper No. 6371
Issued in January 1998
NBER Program(s):   EFG   ME

We develop and implement a limited information diagnostic strategy for assessing the plausibility of monetary business cycle models. Our strategy focuses on a model's ability to reproduce empirical estimates of an actual economy's response to monetary policy shocks. A key input to this diagnostic is a univariate time series representation of the response of money to a shock in monetary policy. We find that a monetary policy shock has only a small contemporaneous effect on the monetary base and M1. Its primary effect is to signal future movements in the money supply. We implement our diagnostic strategy on a limited participation model of money which stresses the importance of credit market frictions in the monetary transmission mechanism.

download in pdf format
   (2029 K)

email paper

This paper is available as PDF (2029 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w6371

Users who downloaded this paper also downloaded these:
Christiano, Eichenbaum, and Evans w5804 Sticky Price and Limited Participation Models of Money: A Comparison
Christiano, Eichenbaum, and Evans w6400 Monetary Policy Shocks: What Have We Learned and to What End?
Christiano, Eichenbaum, and Evans w8403 Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy
Christiano, Eichenbaum, and Evans w4699 The Effects of Monetary Policy Shocks: Some Evidence from the Flow of Funds
Christiano and Gust w7017 Taylor Rules in a Limited Participation Model
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us