Liquidity effects and the monetary transmission mechanism

Article Abstract:

The economic literature provides little evidence of the conventional view that an expansionary-monetary-policy shock results in higher levels of output and employment and lower nominal interest rates. Several economists have cited the Federal Reserve Board's operating procedures as evidence of the counterfactual nature of the assumption that disturbances in monetary policy are related to statistical innovation in money measures. The proof of the validity of the conventional view involves models of business cycles in which monetary-policy shocks create liquidity effects.

Models, Monetary policy, Liquidity (Finance)

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The output, employment, and interest rate effects of government consumption

Article Abstract:

An analysis of the effects on aggregate change factors in government consumption is presented. The analysis is based on an application of the neoclassical stochastic growth model. Theory implies a greater impact on outputand employment of persistent change in government consumption compared to temporary variations. In addition, an analog variation of the Keynesian multiplier can be derived.

Economic aspects, Economic policy, Economic development, Government spending policy

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Factor-hoarding and the propagation of business-cycle shocks

Article Abstract:

The impact of variable capital-utilization rates on business-cycle shock propagation is investigated. An equilibrium business-cycle model wherein cyclical capital-utilization rates are perceived as factor-hoarding is developed to analyze the effects. Results show that variable capital-utilization significantly enlarge and propagate the impact of shocks to agents' environments.

Business cycles, Capital movements

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