The timing of monetary policy shocks
By: Giovanni Olivei and Silvana Tenreyro
Contributors: Tenreyro, Silvana; London School of Economics and Political Science. Centre for Economic Performance
Series: CEP discussion paper -- no. 725; Discussion paper (London School of Economics and Political Science. Centre for Economic Performance : Online) -- no. 725.
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Published: 2006
Place of publication: London
Language: eng
Format: [electronic resource] /
Description: A vast empirical literature has documented delayed and persistent effects of monetary policy shocks on output. We show that this finding results from the aggregation of output impulse responses that differ sharply depending on the timing of the shock: when the monetary policy shock takes place in the first two quarters of the year, the response of output is quick, sizable, and dies out at a relatively fast pace. In contrast, output responds very little when the shock takes place in the third or fourth quarter. We propose a potential explanation for the differential responses based on uneven staggering of wage contracts across quarters. Using a stylized dynamic general equilibrium model, we show that a very modest amount of uneven staggering can generate differences in output responses similar to those found in the data.
Notes: Title from PDF file (viewed on May 31, 2006).

"May 2006."

Includes bibliographical references.

Also available in print.

System requirements: Adobe Acrobat Reader.

Mode of access: World Wide Web.