Monetary shocks in the G-6 countries: is there a puzzle?

Monetary shocks are determined as those that carry a proportionate impact on the shock of money and the price level but sans any long-run effect on output or the interest rate. The response functions generally imply that the monetary shock identified can be construed as a monetary policy shock. An expansionary shock produces a rise in the stock of money, a short-run fall in the interest rate.