Abstrakt
The short-run increase in prices following an unexpected tightening of monetary policy constitutes a frequently reported puzzle. Yet the puzzle is surprisingly easy to explain away when all published models are quantitatively reviewed.
We collect about 1,000 point esti- mates of impulse responses from 70 articles using vector autoregressive models and present a simple method of research synthesis for graphical results. Our ndings indicate publication selection in favor of the intuitive response of prices to a tightening.
The estimates depend systematically on study design: when misspeciffications are filtered out, the price puzzle disappears. In addition, the long-run response of prices to monetary policy shocks is driven by the structural characteristics of the economy.