@techreport{NBERw6371,
 title = "Modeling Money",
 author = "Lawrence J. Christiano and Martin Eichenbaum and Charles L. Evans",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "6371",
 year = "1998",
 month = "January",
 URL = "http://www.nber.org/papers/w6371",
 abstract = {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.},
}