Abstract
In this paper, we first use a structural vector autoregression model to examine whether the US economy responds asymmetrically to expansionary and contractionary monetary policies. The empirical results show that monetary policy has significant asymmetric effects on output and investment. To provide an explanation of such asymmetries, we consider a nonlinear dynamic stochastic general equilibrium (DSGE) model in which collateral constraints are occasionally binding over the business cycle. The nonlinear DSGE model is able to match the empirical findings that macroeconomic aggregates react asymmetrically to positive and negative monetary policy shocks.
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Articles in the same Issue
- Frontmatter
- Contributions
- Occupational Choice and Investments in Human Capital in Informal Economies
- Asymmetric Effects of Monetary Policy
- Trend Growth and Robust Monetary Policy
- Delegating Optimal Monetary Policy Inertia in a Small-Open Economy
- Dating Structural Changes in UK Monetary Policy
- International Historical Evidence on Money Growth and Inflation: The Role of High Inflation Episodes
- Inequality, Growth, and Congestion Externalities
- The Neoclassical Growth Model and the Labor Share Decline
- Environmental Taxes and Economic Growth with Multiple Growth Engines
- Macrodynamic Modeling of Innovation Equilibria and Traps
- Advances
- Unraveling News: Reconciling Conflicting Evidence
- Did the FED React to Asset Price Bubbles?
- Agricultural Trade and Structural Change: Evidence from Paraguay
Articles in the same Issue
- Frontmatter
- Contributions
- Occupational Choice and Investments in Human Capital in Informal Economies
- Asymmetric Effects of Monetary Policy
- Trend Growth and Robust Monetary Policy
- Delegating Optimal Monetary Policy Inertia in a Small-Open Economy
- Dating Structural Changes in UK Monetary Policy
- International Historical Evidence on Money Growth and Inflation: The Role of High Inflation Episodes
- Inequality, Growth, and Congestion Externalities
- The Neoclassical Growth Model and the Labor Share Decline
- Environmental Taxes and Economic Growth with Multiple Growth Engines
- Macrodynamic Modeling of Innovation Equilibria and Traps
- Advances
- Unraveling News: Reconciling Conflicting Evidence
- Did the FED React to Asset Price Bubbles?
- Agricultural Trade and Structural Change: Evidence from Paraguay