Title: What explains the varying monetary response to technology shocks in G-7 countries?
Description: "In a recent paper, Galí, Lopez-Salido, and Valles (2003) examined the Federal Reserve's response to VAR-identified technology shocks.  They found that during the Martin-Burns-Miller era, the Fed responded to technology shocks by overstabilizing output, while in the Volcker-Greenspan era, the Fed adopted an inflation -targeting rule.  We extend their analysis to countries of the G-7; moreover, we consider the factors that may contribute to differing monetary responses across countries.  Specifically, we find a relationship between the volatility of capital investment, type of monetary policy rule, the responsiveness of the rule to output and inflation fluctuations, and the response to technology shocks"--Federal Reserve Bank of St. Louis web site.
Subjects: Monetary policy, Effect of technological innovations
Places: Group of Seven countries