A vast empirical literature has documented delayed and persistent effects of monetary
policy shocks on output. We show that this finding results from the aggregation
of output impulse responses that differ sharply depending on the timing of the shock.
When the monetary policy shock takes place in the first two quarters of the year, the
response of output is quick, sizable, and dies out at a relatively fast pace. In
contrast, output responds very little when the shock takes place in the third or fourth
quarter. We propose a potential explanation for the differential responses based on
uneven staggering of wage contracts across quarters. Using a dynamic general
equilibrium model, we show that a realistic amount of uneven staggering can
generate differences in output responses quantitatively similar to those found in the
data. (JEL E23, E24, E58, J41)
Olivei, Giovanni and Silvana Tenreyro.
2007."The Timing of Monetary Policy Shocks."American Economic Review,
97(3): 636-663.DOI: 10.1257/aer.97.3.636