TY  - JOUR
AU  - Christiano,Lawrence J.
AU  - Eichenbaum,Martin
AU  - Evans,Charles L.
TI  - Modeling Money
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6371
PY  - 1998
Y2  - January 1998
UR  - http://www.nber.org/papers/w6371
L1  - http://www.nber.org/papers/w6371.pdf
N1  - Author contact info:
Lawrence Christiano
Department of Economics
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-8231
Fax: 847/491-7001
E-Mail: l-christiano@northwestern.edu

Martin S. Eichenbaum
Department of Economics
Northwestern University
2003 Sheridan Road
Evanston, IL  60208
Tel: 847/491-8232
Fax: 847/491-7001
E-Mail: eich@northwestern.edu

Charles Evans
Federal Reserve Bank of Chicago
2nd floor
230 S. LaSalle Street
Chicago, IL 60604
Tel: 312-322-5001
E-Mail: charles.l.evans@chi.frb.org
AB  - 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.
ER  -