Year: 2004
Type: report
Abstract: In the New Keynesian model, preference, cost-push, and monetary shocks all compete with the real business cycle model's technology shock in driving aggregate fluctuations.A version of this model, estimated via maximum likelihood, points to these other shocks as being more important for explaining the behavior of output, inflation, and interest rates in the postwar United States data.These results weaken the links between the current generation of New Keynesian models and the real business cycle models from which they were originally derived.They also suggest that Federal Reserve officials have often faced difficult trade-offs in conducting monetary policy.
DOI: 10.3386/w10309
Author: Peter Ireland
Institution: Boston College
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2889970669