Testing the implications of long‐run neutrality for monetary business cycle models

James M. Nason, Timothy Cogley

    Research output: Contribution to journalArticle

    Abstract

    This paper compares sample fluctuations of the US business cycle with those predicted by a class of equilibrium monetary business cycle models. The predictions of the models are generated using the longrun neutrality restrictions implicit in the models. By imposing these restrictions on sample data, tests of the ability of the models to replicate the dynamics of the US business cycle are constructed. Although the predictions of the models for real side variables are rejected, there is evidence that the nominal side predictions of the models are not rejected.

    Original languageEnglish (US)
    Pages (from-to)S37-S70
    JournalJournal of Applied Econometrics
    Volume9
    Issue number1 S
    DOIs
    StatePublished - Dec 1994

    ASJC Scopus subject areas

    • Social Sciences (miscellaneous)
    • Economics and Econometrics

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