The focus of this investigation is on the asymmetric effects of monetary growth shocks in the pre-and post-war periods of United States history. The downward rigidity of nominal wages in the post-war period appears to be an important factor in differe...
The focus of this investigation is on the asymmetric effects of monetary growth shocks in the pre-and post-war periods of United States history. The downward rigidity of nominal wages in the post-war period appears to be an important factor in differentiating the slope of the aggregate supply curve over time. Accordingly, the response of real output and price to expansionary monetary growth shocks is similar in the pre-and post-war periods. In contrast, the aggregate supply curve is flatter in the face of negative monetary growth shocks in the post-war period, exacerbating output contraction and moderating price deflation. The apparent change in the asymmetric effects of monetary growth shocks has determined economic performance in the United States over time. [E30, E33, E34, E35]