1. Does Monetary Policy Have Long-Run Effects?
- Author
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Jordà, Òscar, Singh, Sanjay R., and Taylor, Alan M.
- Subjects
- *
MONETARY policy , *INTEREST rates , *BUSINESS cycles , *INDUSTRIAL productivity , *ECONOMIC research - Abstract
The article argues whether monetary policy has long-term effects on the economy, particularly its potential output. It explores how tight monetary policy can reduce an economy's potential output even after a decade, primarily through investment decisions that result in lower productivity and capital stock. Conversely, loose monetary policy does not appear to raise long-term potential output, challenging the traditional belief that monetary policy is neutral in the long run.
- Published
- 2023