Publication

This paper analyzes the effect of monetary policy shocks on output. The authors state that the effect builds to a peak several months after the shock and then gradually dies out. They examine what factors imply this hump-shaped effect using a "new open economy macroeconomics" model and find that the effect is likely to result if the model features a "catching up with the Joneses" effect, pricing-to-market behavior of firms and imperfect international financial market integration.