Supply Shocks and Monetary Policy Revisited

  title={Supply Shocks and Monetary Policy Revisited},
  author={Robert J. Gordon},
  journal={ERN: Monetary Policy Objectives; Policy Designs; Policy Coordination (Topic)},
  • R. Gordon
  • Published 1 March 1984
  • Economics
  • ERN: Monetary Policy Objectives; Policy Designs; Policy Coordination (Topic)
This paper reviews the main issues that supply shocks pose for the conduct of monetary policy. A simple version of the Gordon-Phelps model shows that the necessary condition for actual real GNP to be maintained at its equilibrium level in the wake of a supply shock is for the change innominal GNP to exceed the change in the nominal wage by the change in the income share of the raw material in GNP. The required "wedge" between nominal GNP and wage growth can be accomplished by any combination of… 
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The Demand for and Supply of Inflation
  • R. Gordon
  • Economics
    The Journal of Law and Economics
  • 1975
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