Does Monetary Policy Generate Recessions?

Federal Reserve Bank of Atlanta Working Paper 98-12

Posted: 4 Sep 1998

See all articles by Christopher A. Sims

Christopher A. Sims

Princeton University - Department of Economics; National Bureau of Economic Research (NBER)

Tao A. Zha

Federal Reserve Bank of Atlanta; Emory University

Date Written: July 1998

Abstract

The issue of uncovering the effects of monetary policy is far short of resolution. In the identified VAR literature, restrictions have been imposed to identify the effects of unpredictable monetary policy disturbances. We offer critical views on the unreasonable assumptions in the existing work and argue for careful economic argument about identifying assumptions. We display a structural stochastic equilibrium model in which our VAR identification would produce correct results while drawing attention to the serious lack of time series fit in most of the DSGE literature.

JEL Classification: E5

Suggested Citation

Sims, Christopher A. and Zha, Tao A., Does Monetary Policy Generate Recessions? (July 1998). Federal Reserve Bank of Atlanta Working Paper 98-12, Available at SSRN: https://ssrn.com/abstract=119676

Christopher A. Sims (Contact Author)

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Tao A. Zha

Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States
404-521-8353 (Phone)
404-521-8956 (Fax)

Emory University ( email )

201 Dowman Drive
Atlanta, GA 30322
United States

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