I assess the real effects of monetary policy shocks by estimating a vector autoregressive framework with a rich lag structure on a long postwar U.S. sample. I find robust evidence of a “two-wave” effect: monetary policy shocks trigger a short-run cycle, followed by a longer-run one. I associate the second cycle with a productivity channel: monetary policy shocks generate long-run reactions in R&D spending and TFP, but not through increased innovation at the technological frontier. Crucially, evidence of the two-wave effect is driven by monetary policy easings, while policy tightenings generate standard short-run real activity responses. My results are robust to alternative econometric specifications and identification strategies. These findings have important implications for both macroeconomic modeling and the design of monetary policy.
Presented at: 2nd Padova Workshop on Macroeconomic Expectations (poster), 5th Ph.D. Workshop Padova–Venezia–Verona.