Academic journal article Indian Journal of Economics and Business

Replicating Meier and Mueller's 2006 JMCB Article

Academic journal article Indian Journal of Economics and Business

Replicating Meier and Mueller's 2006 JMCB Article

Article excerpt

I. INTRODUCTION

Meier and Mueller (2006) published an article "Fleshing Out the Monetary Transmission Mechanism: Output Composition and the Role of Financial Frictions" in the December 2006 issue of Journal of Money, Credit and Banking. If frictions affect the transmission mechanism, then the effect of Federal Reserve actions on the economy is diluted. The paper finds, however, that frictions are not important and that the transmission of monetary policy is more direct than it would be if frictions were present. To do this, they embed a financial accelerator in a DSGE (dynamic stochastic general equilibrium) model and analyze the effect of financial frictions on the monetary transmission mechanism. The model is very complicated and sophisticated, and perforce the authors cannot completely describe all its details in the article. Only the code can show exactly what the authors have done to achieve their results. Therefore it is especially important that the correct code be available for inspection by other researchers. The only way to tell that the correct code is available for inspection is if the code and data reproduce the published results.

The article contains three tables of results. In accordance with the instructions of the Journal's editors, the authors deposited data and Matlab code in the Journal's archive. We note in passing that both the data and code were in a format that could only be read by Matlab. …

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