TY  - JOUR
AU  - Leeper,Eric M.
AU  - Zha,Tao
TI  - Empirical Analysis of Policy Interventions
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9063
PY  - 2002
Y2  - July 2002
UR  - http://www.nber.org/papers/w9063
L1  - http://www.nber.org/papers/w9063.pdf
N1  - Author contact info:
Eric M. Leeper
Department of Economics
304 Wylie Hall
Indiana University
Bloomington, IN  47405
Tel: 812/855-9157
Fax: NA
E-Mail: eleeper@indiana.edu

Tao Zha
Emory University
1602 Fishburne Drive
Atlanta, GA 30322-2240
Tel: 404/723-3254
Fax: 404/727-4639
E-Mail: tzha@emory.edu
AB  - We construct linear projections of macro variables conditional on hypothetical paths of monetary policy, using as an example an identified VAR model.  Hypothetical policies are restricted to ones where both the policy intervention and its impacts are consistent with history -- otherwise the linear projections are likely to be unreliable.  We use the approach to interpret Federal Reserve decisions, modeling their frequent reassessment in light of new information about the tradeoffs policymakers face. The interventions we consider matter: they can shift projected paths and probability distributions of macro variables in economically meaningful ways.
ER  -