Post hoc ergo propter once more an evaluation of 'does monetary policy matter?' in the spirit of James Tobin

Published

Journal Article

Christina and David Romer's paper 'Does Monetary Policy Matter?' advocates the so-called 'narrative' approach to causal inference. We demonstrate that this method will not sustain causal inference. First, it is impossible to distinguish monetary shocks from oil shocks as causes of recessions. Second, a world in which the Fed only announces intentions to act cannot be distinguished from one in which it in fact acts. Third, the techniques of dynamic simulation used in the Romers' study are inappropriate and quantitatively misleading. And, finally, their approach provides no basis for establishing causal asymmetry. © 1994.

Full Text

Duke Authors

Cited Authors

  • Hoover, KD; Perez, SJ

Published Date

  • January 1, 1994

Published In

Volume / Issue

  • 34 / 1

Start / End Page

  • 47 - 74

International Standard Serial Number (ISSN)

  • 0304-3932

Digital Object Identifier (DOI)

  • 10.1016/0304-3932(94)01149-4

Citation Source

  • Scopus