Ball, Laurence. <br/><br/>
Expectations and the Effects of Monetary Policy / 
Laurence Ball, Dean Croushore. 
 - Cambridge, Mass.  National Bureau of Economic Research  1995. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w5344 .
 - Working Paper Series (National Bureau of Economic Research)  no. w5344. .
<br/><br/> November 1995. 
<br/><br/> This paper examines the predictive power of shifts in monetary policy, as measured by changes in the federal funds rate, for output, inflation, and survey expectations of these variables.  We find that policy shifts have larger effects on actual output than on expected output, suggesting that agents underestimate the effects of policy on aggregate demand.  Our results help to explain the real effects of monetary policy, and they provide a strong rejection of the rational expectations hypothesis. 
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