THE ROLE OF MONETARY SHOCKS IN EQUILIBRIUM BUSINESS-CYCLE THEORY - 3 EXAMPLES

We study three equilibrium business cycle models that differ according to the mechanism through which monetary growth shocks affect the econ omy. These include models with inflation lax effects, with staggered n ominal wage contracts, and with unanticipated inflation effects. We re view some monetary features of business cycles in postwar US data and compare these with the same properties computed for the artificial eco nomies. Our goal is to identify the features of the business cycle tha t these mechanisms help to explain, the features that remain puzzling, and how the form of the mechanism matters. (C) 1998 Elsevier Science B.V. All rights reserved.