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Robert Schuman Centre for Advanced Studies - Department of Economics

Monetary policy also has short-run effects

Giancarlo Corsetti, EUI Economics Professor and Pierre Werner Chair at the Robert Schuman Centre, has co-authored a blog post for the Centre for Economic Policy Research that analyses why countries' monetary policies have short-run effects, and what they are.

27 April 2023 | Opinion

Student studying on her laptop at the historical archives

Friedman famously argued that "monetary actions affect economic conditions only after a lag that is both long and variable". 

In this column, EUI Professor Giancarlo Corsetti and co-authors use novel Spanish daily series for consumption, corporate sales, and employment to challenge this view by showing that the economy also reacts at high frequency to a monetary tightening. "Consumption declines substantially within five days, and corporate sales within 30 days. Employment also drops quickly, but more modestly. These effects disappear when aggregating data to quarterly frequency".

The piece was published on

Last update: 27 April 2023

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