Economics, Econometrics and Finance
8 years ago

Tightening monetary policy impacts output more than expansionary policy.

Journal of Changchun University
Test for Asymmetric Effects of Monetary Policy Associated with Fluctuations of Asset Prices——An Empirical Analysis Based on the Modified NK-SVAR Model
Xu Sha

Paper Summary

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Fluctuations in asset prices impact the economy by affecting total output. A modified model was used to test how monetary policy influences output differently depending on whether it is tightened or expanded. The results show that tightening monetary policy has a stronger effect on output than expanding it. This effect is closely linked to changes in asset prices, suggesting that future monetary policies should consider these changes.