Working Papers

March 1979, No. 79-2

A Note on the Neutrality of Temporary Monetary Disturbances

Marvin Goodfriend and Robert G. King

In the classical macroeconomic models constructed by Lucas (1972, 1975) and Barro (1976), monetary aggregates are assumed to be generated by a logarithmic random walk.  This specification implies that all monetary growth is (a) unanticipated and (b) permanent.

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