Eyler, Robert and Sonora, Robert (2010): Is a National Monetary Policy Optimal?
Download (728kB) | Preview
Monetary policy has differential effects throughout the United States. When setting monetary policy, central banks must consider how national and regional economic goals are being achieved. In this study, the methods and evidence are focused on using structural VAR analysis, assuming that the United States has an interest rate channel of monetary policy. The methods estimate the symmetry and magnitude of monetary shocks on income, unemployment and prices in major metropolitan statistical areas (MSAs) of the United States as compared to the national effects. As in Carlino and Defina (1998) and Florio (2005), differential regional effects connect to optima currency areas (OCA) literature, the advent of the Euro, increased regionalism, and the possibility of more monetary unions forming worldwide. Events in early 2010 concerning the Euro's stability show the importance of monitoring regions and their reactions to policy.
|Item Type:||MPRA Paper|
|Original Title:||Is a National Monetary Policy Optimal?|
|Keywords:||E52 , E61, E37, R12|
|Subjects:||E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy
R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity
E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E37 - Forecasting and Simulation: Models and Applications
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
|Depositing User:||Sonora Robert J|
|Date Deposited:||03. Sep 2010 14:37|
|Last Modified:||16. Jan 2014 00:02|
R. J. Barro. Unanticipated money growth and unemployment in the united states. The American Economic Review, 67(2):101-115, 1977.
R. J. Barro. Unanticipated money, output, and the price level in the united states. The Journal of Political Economy, 86(4):549-580, 1978.
G. Carlino and R. Defina. The differential regional effects of monetary policy. The Review of Economics and Statistics, 80(4):572-587, November 1998.
G. Carlino and R. Defina. Do states respond differently to changes in monetary policy? Business Review, (Jul):17-27, 1999.
S. G. Cecchetti, N. C. Mark, and R. J. Sonora. Price index convergence among united states cities. International Economic Review, 43(4):1081-1099, 2002.
R. Clarida, J. Gali, and M. Gertler. Optimal monetary policy in open versus closed economies: An integrated approach. The American Economic Review, 91(2):248-252, 2001.
J. P. Cover. Asymmetric effects of positive and negative money-supply shocks. The Quarterly Journal of Economics, 107(4):1261-82, November 1992.
A. Florio. Asymmetric monetary policy: empirical evidence for italy. Applied Economics, 37(7):751-764, April 2005.
J. Gali and T. Monacelli. Monetary policy and exchange rate volatility in a small open economy. The Review of Economic Studies, 72(3):707-734, 2005.
W. H. Greene. Econometric Analysis (5th Edition). Prentice Hall, 2002.
C. Hefeker. Federal monetary policy. The Scandinavian Journal of Economics, 105.
O. Jorda. Estimation and inference of impulse responses by local projections. American Economic Review, 95(1):161-182, March 2005.
G. Karras. Are the output effects of monetary policy asymmetric? evidence from a sample of european countries. Oxford Bulletin of Economics and Statistics, 58(2):267-78, May 1996.
I. B. Kravis and R. E. Lipsey. Toward an explanation of national price levels. Princeton Studies in International Finance, (52), November 1983.
D. P. Morgan. Asymmetric effects of monetary policy. Economic Review, (QII):21-33, 1993.
R. A. Mundell. A theory of optimum currency areas. The American Economic Review, 51(4):657-665, 1961.
C. A. Sims. Macroeconomics and reality. Econometrica, 48(1):1-48, January 1980.