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RESOLVING THE LIQUIDITY PUZZLE

Published online by Cambridge University Press:  02 March 2005

APOSTOLOS SERLETIS  and
VICTOR CHWEE
APOSTOLOS SERLETIS
Affiliation:
University of Calgary
VICTOR CHWEE
Affiliation:
University of Calgary
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Abstract

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This paper considers a nonborrowed-monetary-base VAR and a targets and instrument framework favored by the monetarists to resolve the puzzles thrown up by monetary VAR studies. The results show that nonborrowed-monetary-base shocks produce responses consistent with a priori expectations about the effects of monetary policy on interest rates, prices, and output.

Keywords

Nonborrowed-Monetary-Base ShocksVAR ModelMonetary Aggregates
Type
Research Article
Information
Macroeconomic Dynamics , Volume 1 , Issue 4 , December 1997 , pp. 720 - 739
Copyright
© 1997 Cambridge University Press