Munich Personal RePEc Archive

Output Fluctuations and Monetary Shocks: Evidence from Colombia

Reinhart, Carmen and Reinhart, Vincent (1991): Output Fluctuations and Monetary Shocks: Evidence from Colombia. Published in: IMF Staff Papers , Vol. 38, No. 4 (December 1991): pp. 705-735.

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Abstract

Using annual data for Colombia over the last 30 years, we test competing theories that explain macroeconomic fluctuations: the neoclassical synthesis, which posits that in the presence of temporary price rigidity, an unanticipated monetary expansion produces output gains that erode over time with increases in the price level; and an alternative explanation, which focuses on "real" technological or preference shocks as sources of output changes. Coefficients from this system are used to examine the long-run neutrality of nominal quantities with respect to permanent movements in the money stock and the short-run sensitivity of output to inflation.

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