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RESOLVING THE LIQUIDITY PUZZLE
Published online by Cambridge University Press: 02 March 2005
Abstract
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.
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- © 1997 Cambridge University Press
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