Reconsideringtheroleofmoneyforoutput,pricesand interestrates

New Keynesianmodelsofmonetarypolicydownplaytheroleofmonetaryaggregates,in the sensethatthelevelofoutput,prices,andinterestratescanbedeterminedwithout knowledgeofthequantityofmoney.Thispaperevaluatestheempiricalvalidityofthis prediction bystudyingtheeffectsofshockstomonetaryaggregatesusingavector autoregression(VAR).Shockstomonetaryaggregatesareidentifiedbytherestrictions suggested byNewKeynesianmonetarymodels.Contrarytothetheoreticalpredictions, shocks tobroadmonetaryaggregateshavesubstantialandpersistenteffectsonoutput, pricesandinterestrates