We discuss the evolution in macroeconomic thought on the monetary policy transmission mechanism and present related empirical evidence. The core channels of policy transmission - the neoclassical links between short-term policy interest rates, other asset prices such as long-term interest rates, equity prices, and the exchange rate, and the consequent effects on household and business demand - have remained steady from early policy-oriented models (like the Penn-MIT-SSRC MPS model) to modern dynamic-stochastic-general-equilibrium (DSGE) models. In contrast, non-neoclassical channels, such as credit-based channels, have remained outside the core models. In conjunction with this evolution in theory and modeling, there have been notable changes in policy behavior (with policy more focused on price stability) and in the reduced form correlations of policy interest rates with activity in the United States. Regulatory effects on credit provision have also changed significantly. As a result, we review the empirical evidence on the changes in the effect of monetary policy actions on real activity and inflation and present new evidence, using both a relatively unrestricted factor-augmented vector autoregression (FAVAR) and a DSGE model. Both approaches yield similar results: Monetary policy innovations have a more muted effect on real activity and inflation in recent decades as compared to the effects before 1980. Our analysis suggests that these shifts are accounted for by changes in policy behavior and the effect of these changes on expectations, leaving little role for changes in underlying private-sector behavior (outside shifts related to monetary policy changes).

Forecasting using "diffusion indices" has received a good deal of attention in recent years. The idea is to use the common factors estimated from a large panel of data to help forecast the series of interest. This paper assesses the extent to which the forecasts are influenced by (i) how the factors are estimated and/or (ii) how the forecasts are formulated. We find that for simple data-generating processes and when the dynamic structure of the data is known, no one method stands out to be systematically good or bad. All five methods considered have rather similar properties, though some methods are better in long-horizon forecasts, especially when the number of time series observations is small. However, when the dynamic structure is unknown and for more complex dynamics and error structures such as the ones encountered in practice, one method stands out to have smaller forecast errors. This method forecasts the series of interest directly, rather than the common and idiosyncratic components separately, and it leaves the dynamics of the factors unspecified. By imposing fewer constraints, and having to estimate a smaller number of auxiliary parameters, the method appears to be less vulnerable to misspecification, leading to improved forecasts.

This is a reproduction of a book published before 1923. This book may have occasional imperfectionssuch as missing or blurred pages, poor pictures, errant marks, etc. that were either part of the original artifact, or were introduced by the scanning process. We believe this work is culturally important, and despite the imperfections, have elected to bring it back into print as part of our continuing commitment to the preservation of printed worksworldwide. We appreciate your understanding of the imperfections in the preservation process, and hope you enjoy this valuable book.++++The below data was compiled from various identification fields in the bibliographic record of this title. This data is provided as an additional tool in helping to ensure edition identification: ++++ Claudii Peleteri Regni Administri, Vita, Petri Pithoei, Ejus Proavi, Vitae Adjuncta Accesserunt Elogia, Opuscula Selecta, Notae Aliaeque Appendices Jean Boivin Franciscum Jouenne, 1716

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Due to the very old age and scarcity of this book, many of the pages may be hard to read due to the blurring of the original text, possible missing pages, missing text and other issues beyond our control.

Due to the very old age and scarcity of this book, many of the pages may be hard to read due to the blurring of the original text, possible missing pages, missing text and other issues beyond our control.

This scarce antiquarian book is a selection from Kessinger Publishing's Legacy Reprint Series. Due to its age, it may contain imperfections such as marks, notations, marginalia and flawed pages. Because we believe this work is culturally important, we have made it available as part of our commitment to protecting, preserving, and promoting the world's literature. Kessinger Publishing is the place to find hundreds of thousands of rare and hard-to-find books with something of interest for everyone!

Due to the very old age and scarcity of this book, many of the pages may be hard to read due to the blurring of the original text, possible missing pages, missing text and other issues beyond our control.

Due to the very old age and scarcity of this book, many of the pages may be hard to read due to the blurring of the original text, possible missing pages, missing text and other issues beyond our control.