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Q: Economic Cycles as Affected by Monetary Policy ( No Answer,   1 Comment )
Question  
Subject: Economic Cycles as Affected by Monetary Policy
Category: Business and Money > Economics
Asked by: duchessmary-ga
List Price: $75.00
Posted: 25 Nov 2005 12:53 PST
Expires: 25 Dec 2005 12:53 PST
Question ID: 597541
lOOKING FOR SCHOLARLY REFERENCES THAT CORRELATE BUSINESS ECONOMIC
CYCYLES WITH GOVERNMENT MONETARY POLICY. SPECIFICALLY LOOKING FOR ANY
"LAG TIME" BETWEEN A CHANGE IN MONETARY POLICY AND ITS MEASURED EFFECT
ON THE BUSINESS CYCLE. THE QUESTION DEBATED IS WHETHER OR NOT
PRESIDENT BUSH IS STILL DEALING WITH THE EFFECTS OF THE MONETARY
POLICY OF THE CLINTON ADMINISTRATION.
Answer  
There is no answer at this time.

Comments  
Subject: Re: Economic Cycles as Affected by Monetary Policy
From: oroblram-ga on 26 Nov 2005 11:44 PST
 
Thanks for an interesting question. In short the answer is: it is not
very likely that the Bush administration is still dealing with
'Clinton's' monetary policy.

I write Clinton's monetary policy in inverted commas, as President
Clinton did not set monetary policy (neither does Bush, of course),
since monetary policy is run by the FED. The FED is independent of the
administration. Monetary policy has to deal with long - and possibly
varying - lags, but the general consensus is that a typical lag has a
duration of about 1-2 years.

That said, to the extent that certain (monetary) policies have
long-lasting effects, e.g. because they change inflation expectations
(think of a hyperinflation), a lag length of ca. five years is not
entirely impossible. U.S. inflation expectations have been pretty
stable, though. Given that Bush came into office in 2000, I guess it
is safe to assume that the Bush administration is not longer
'suffering/benefitting' from the monetary policy of the Clinton years.

If you are interested in more information about monetary transmission
the following paper might be of interest;

http://www.econ.cam.ac.uk/faculty/geraats/tpmptp.pdf

It was found using the following search terms: monetary policy transmission lag fed

Hope this helps,
Philipp

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