Asymmetric Effects of Monetary Policy

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2 Citations (Scopus)


In this paper, we first use a structural vector autoregression model to examine whether the US economy responds asymmetrically to expansionary and contractionary monetary policies. The empirical results show that monetary policy has significant asymmetric effects on output and investment. To provide an explanation of such asymmetries, we consider a nonlinear dynamic stochastic general equilibrium (DSGE) model in which collateral constraints are occasionally binding over the business cycle. The nonlinear DSGE model is able to match the empirical findings that macroeconomic aggregates react asymmetrically to positive and negative monetary policy shocks.

Original languageEnglish
Pages (from-to)425-447
Number of pages23
JournalB.E. Journal of Macroeconomics
Issue number2
Publication statusPublished - 2021 Jun 1

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


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