Working Paper: NBER ID: w1589
Authors: Carl E. Walsh
Abstract: A model of interest rate movements in response to new information on the money stock is developed.The model, which incorporates several earlier approaches as special cases, makes explicit the manner in which estimated interest rate responses to money surprises depend on the relative variances of nominal and real disturbances, as well as on the monetary authority's policy and the credibility of that policy.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| money supply announcements (E51) | interest rates (E43) |
| money supply announcements (E51) | expectations about future short-term interest rates (E43) |
| monetary authority's policy behavior (E52) | interest rates (E43) |
| positive money surprise (G14) | anticipated future real interest rates (E43) |
| higher policy credibility (E61) | sensitivity of nominal interest rates to money announcements (E49) |