Historically, attempts to solve the liquidity puzzle have focused on narrowly defined monetary aggregates, such as non-borrowed reserves, the monetary base, or M1. Many of these efforts have failed to find a short-term negative correlation between interest rates and monetary policy innovations....

This paper structurally interprets empirical results obtained with Blanchard and Quah (1989) decompositions of output into permanent and transitory shocks. This is done using assumptions about the qualitative responses of variables to structural shocks that are consistent with many different...

We find that shocks with no immediate effect on the price level explain essentially all short-run variance of aggregate output while shocks that immediately affect price explain virtually none of that variance. Similar findings are obtained with aggregate, sectoral and industry-level data, both...

This paper structurally interprets empirical results obtained from Blanchard and Quah (1989) decompositions of output into permanent and transitory shocks. This is done based on assumptions about the qualitative responses of variables to structural shocks that are consistent with many different...

We identify the effects of monetary policy shocks on macroeconomic variables in VARs using the Divisia M4 measure of money as the policy indicator variable. We obtain theoretically sensible responses—whether or not a commodity price index is included. Thus, we eliminate the well-known...