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Measuring the U.S. monetary noise shocks.

  • Published In: Economic Inquiry, 2025, v. 63, n. 1. P. 98 1 of 3

  • Database: Academic Search Ultimate 2 of 3

  • Authored By: Wu, Yi‐Hua; Lai, Ching‐Chong 3 of 3

Abstract

Agents' beliefs regarding future monetary policy changes influence their current decisions. However, these expectations may not always materialize in the future. This study shows that the monetary fundamental shocks (exogenous changes consistent with expectations) stabilize output and inflation, while the noise shocks (biased beliefs that fail to be realized in the future) increase economic fluctuations. Moreover, factors that amplify financial frictions—the spread between the capital return of entrepreneurs and the risk‐free interest rate of a central bank—can increase anticipation effects associated with these two types of monetary policy shocks. [ABSTRACT FROM AUTHOR]

Additional Information

  • Source:Economic Inquiry. 2025/01, Vol. 63, Issue 1, p98
  • Document Type:Article
  • Subject Area:History
  • Publication Date:2025
  • ISSN:0095-2583
  • DOI:10.1111/ecin.13262
  • Accession Number:181889679
  • Copyright Statement:Copyright of Economic Inquiry is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

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