title: An Evaluation of the Non-Neutrality of Money.
abstract: This paper evaluates the effect of a change in the quantity of money on relative prices in the U.S. economy based on quarterly time-series for the period of 1959 to 2013. We also estimate the implication of a change in relative prices on the rate of inflation and macroeconomic variables. The empirical results indicate that the change of money supply not only affects relative prices but also affects the inflation rate and real variables, such as investment, natural rate of unemployment and potential GDP, through the change in relative prices. The relevant finding of our study is that money is not neutral in a non-traditional sense because a change in the money supply disturbs relative prices and, consequently, the allocation of resources in the economy. This finding has serious implications that must be considered in the transmission mechanisms of monetary policy.
authors.affiliation: Department of economics, Catholic University of Brasilia, Brasília, Brazil.
authors.forename: Tito Belchior Silva
authors.initials: TB
authors.lastname: Moreira
authors.affiliation: Department of economics, Catholic University of Brasilia, Brasília, Brazil.
authors.forename: Benjamin Miranda
authors.initials: BM
authors.lastname: Tabak
authors.affiliation: Department of economics, Institute for Applied Economic Research, Rio de Janeiro, Brazil.
authors.forename: Mario Jorge
authors.initials: MJ
authors.lastname: Mendonça
authors.affiliation: Department of economics, Institute for Applied Economic Research, Brasília, Brazil.
authors.forename: Adolfo
authors.initials: A
authors.lastname: Sachsida
mesh_terms: D003132:Commerce; D006801:Humans; D007250:Inflation, Economic; D012959:Socioeconomic Factors; D014478:Unemployment; D014481:United States