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Title:US volatility cycles of output and inflation, 1919 - 2004: A money and banking approach to a puzzle PDF Logo
Authors:Benk, Szilárd
Gillman, Max
Kejak, Michal
Issue Date:2008
Series/Report no.:Cardiff Economics Working Papers E2008/28
Abstract:The post-1983 moderation coincided with an ahistorical divergence in the money aggregate growth and velocity volatilities away from the downward trending GDP and inflation volatilities. Using an endogenous growth monetary DSGE model, with micro-based banking production, enables a contrasting characterization of the two great volatility cycles over the historical period of 1919-2004, and enables this puzzle to be addressed more easily. The volatility divergence is explained by the upswing in the credit volatility that kept money supply variability from translating into inflation and GDP volatility.
Subjects:volatility
money and credit shocks
growth
inflation
JEL:E13
E32
E44
Document Type:Working Paper
Appears in Collections:Cardiff Economics Working Papers, Cardiff Business School, Cardiff University

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