Testing Long-Run Neutrality - Economic Quarterly Summer 1997
Article
Testing Long-Run Neutrality
Testing Long-Run Neutrality - Economic Quarterly Summer 1997
Testing Long-Run Neutrality - Economic Quarterly Summer 1997
Summer
1997
Testing Long-Run Neutrality
Mark W. Watson {marawat1}
Robert G. King {robkin1}
<p>Propositions about long-run neutrality are at the heart of macroeconomics. In the 1970s, Lucas and Sargent criticized traditional neutrality tests, suggesting that long-run propositions could not be tested without a detailed structural model. Yet, when nominal variables are integrated, long-run neutrality can be tested with limited structural information. Using a suitable econometric framework, we provide empirical tests of four long-run propositions: the neutrality of money, the superneutrality of money, the Fisher effect, and the vertical Phillips curve.</p>
/RichmondFedOrg/publications/research/economic_quarterly/1997/summer/pdf/king.pdf
Inflation & Monetary Policy
1
Inflation
Monetary Policy
<p>Propositions about long-run neutrality are at the heart of macroeconomics. In the 1970s, Lucas and Sargent criticized traditional neutrality tests, suggesting that long-run propositions could not be tested without a detailed structural model. Yet, when nominal variables are integrated, long-run neutrality can be tested with limited structural information. Using a suitable econometric framework, we provide empirical tests of four long-run propositions: the neutrality of money, the superneutrality of money, the Fisher effect, and the vertical Phillips curve.</p>
Economic Quarterly
Summer
1997