Monetary Policy Shocks: What Have We Learned and to What End?

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

NBER Working Paper No. 6400
Issued in February 1998
NBER Program(s):   EFG   ME

This paper reviews recent research that grapples with the question: What happens after an exogenous shock to monetary policy? We argue that this question is interesting because it lies at the center of a particular approach to assessing the empirical plausibility of structural economic models that can be used to think about systematic changes in monetary policy institutions and rules. The literature has not yet converged on a particular set of assumptions for identifying the effects of an exogenous shock to monetary policy. Nevertheless, there is considerable agreement about the qualitative effects of a monetary policy shock in the sense that inference is robust across a large subset of the identification schemes that have been considered in the literature. We document the nature of this agreement as it pertains to key economic aggregates.

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Document Object Identifier (DOI): 10.3386/w6400


  • Published as "The Effects of Monetary Policy Shocks: Evidence from the Flow of Funds", Review of Economics and Statistics, Vol. 78, no. 1(February 1996): 16-34.
  • Christiano, Lawrence J. & Eichenbaum, Martin & Evans, Charles L., 1999. "Monetary policy shocks: What have we learned and to what end?," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 2, pages 65-148 Elsevier.

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