Working Paper: NBER ID: w3045
Authors: Ray C. Fair
Abstract: This paper compares results from the narrative approach of Romer and Romer (1989) to those from the structural approach regarding the effects of monetary policy on real output. The results from both approaches lead to the conclusions that monetary policy matters and that the effects build slowly following a monetary policy shock. The narrative approach, however, leads to larger and more persistent effects than does the structural approach. Reasons are advanced in the paper as to why this might be so.
Keywords: Monetary Policy; Real Output; Narrative Approach; Structural Approach
JEL Codes: E52; E58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Monetary Policy (E52) | Real Output (E23) |
| Monetary Shock (E49) | Unemployment Rate (J64) |
| Monetary Policy Shock (E39) | Industrial Production (L69) |
| Monetary Policy Shock (E39) | Various Categories of Investment and Consumption (E21) |
| Structural Model Properties (C52) | Narrative Approach Conclusions (Z10) |