Measuring and analyzing the dynamic effects of monetary policy on GDP - USA case study 1990-2023
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"This study investigates the dynamic influence of monetary policy on the gross domestic product (GDP) of the United States over the period spanning 1990 to 2023. By employing dynamic macroeconomic models, the research elucidates the enduring effects of monetary policy across the economy, as central banks leverage these models to stimulate aggregate demand. The analysis employs the autoregressive distributed lag (ARDL) framework to assess the dynamic interplay between GDP and specific monetary policy instruments, including required reserves, excess reserves, net domestic credit, and the central bank interest rate. The results show a link of long-term equilibrium between GDP growth and monetary policy tools. In the short term, excess reserves exhibit a negative impact on economic output, while net domestic credit demonstrates no significant effect. Conversely, over the long term, the central bank interest rate, net domestic credit, and required reserves all exert a substantial and positive influence on output. However, excess reserves are associated with a notable decline in output." -- first page
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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 License.