But what is a "monetary policy shock"? It would seem that rate increases at a 'measured pace' would almost not qualify. Sure the accumulated changes would matter to the economy, but ...

I was thinking of Prof. Hamilton's argument that the high price of oil hasn't impacted the economy as much as some would expect because of the gradual nature of the demand driven price increase as opposed to a rapid rise in prices due to a supply shock.

How did the author's define a monetary shock? Just some thoughts ...
Calculated Risk | Homepage | 06.15.05 - 9:58 pm | #

Dumb vocab question: "deviations" = "standard deviations?" Really interesting paper; I need to buy some time this weekend to read it.
fester | Homepage | 06.16.05 - 12:37 pm | #

I believe that it refers to the absolute deviation so that if 100 is the value of output at equilibrium (unshocked) and after the shock it moves to 120, it would show as .2 in the diagram.
Mark Thoma | Homepage | 06.16.05 - 1:37 pm | #