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Effect of monetary policy shocks on the racial unemployment rates in the US

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  • Bennani, Hamza

Abstract

This study analyzes the effect of monetary policy shocks on the unemployment rate of different racial groups in the US, using data from 1969Q2 to 2015Q4. Employing a narrative approach to identify monetary policy shocks and local projections, we find that although an expansionary monetary shock affects White workers positively and significantly, the effect on Black workers is larger, and for Hispanic workers it is not statistically different from zero. These results are robust when considering unconventional monetary policy measures in the specification, and when exploring the impact of monetary policy on different genders and age groups. We also highlight how recession affects the transmission channel of monetary policy to the labor market for White and Hispanic workers. Finally, further extensions suggest that the Fed’s monetary policy is effective in reducing the racial unemployment gap, particularly between Whites and Blacks, and during economic booms.

Suggested Citation

  • Bennani, Hamza, 2023. "Effect of monetary policy shocks on the racial unemployment rates in the US," Economic Systems, Elsevier, vol. 47(1).
    • Handle: RePEc:eee:ecosys:v:47:y:2023:i:1:s0939362522001200
    DOI: 10.1016/j.ecosys.2022.101058
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    More about this item

    Keywords

    Monetary policy; Unemployment; Racial disparities;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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