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The impact of monetary policy on unemployment hysteresis

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  • Engelbert Stockhammer
  • Simon Sturn

Abstract

This article investigates the hypothesis that the extent to which hysteresis occurs in the aftermath of recessions depends on monetary policy reactions. The degree of hysteresis is explained econometrically by the extent of monetary easing during a recession and by standard variables for labour market institutions in a pooled cross country analysis using quarterly data. The sample includes 40 recessions in 19 Organization for Economic Co-operation and Development (OECD) countries for which the required data is available. The time period lasts for the period from 1980 to 2007. This article builds on Ball (1999) and extends the sample of countries, the time period under investigation and the set of control variables.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 44 (2012)
Issue (Month): 21 (July)
Pages: 2743-2756

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Handle: RePEc:taf:applec:44:y:2012:i:21:p:2743-2756

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Citations

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Cited by:
  1. J. Bradford DeLong & Lawrence H. Summers, 2012. "Fiscal Policy in a Depressed Economy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 44(1 (Spring), pages 233-297.
  2. Laurence M. Ball, 2009. "Hysteresis in Unemployment: Old and New Evidence," NBER Working Papers 14818, National Bureau of Economic Research, Inc.
  3. David R. Howell, 2010. "Institutions, Aggregate Demand and Cross-Country Employment Performance: Alternative Theoretical Perspectives and the Evidence," Working Papers wp228, Political Economy Research Institute, University of Massachusetts at Amherst.
  4. Dave Reifschneider & William Wascher & David Wilcox, 2013. "Aggregate supply in the United States: recent developments and implications for the conduct of monetary policy," Finance and Economics Discussion Series 2013-77, Board of Governors of the Federal Reserve System (U.S.).
  5. Simon STURN, 2013. "Are corporatist labour markets different? Labour market regimes and unemployment in OECD countries," International Labour Review, International Labour Organization, vol. 152(2), pages 237-254, 06.
  6. Simon Sturn, 2011. "Labour market regimes and unemployment in OECD countries," IMK Working Paper 6-2011, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  7. Engelbert Stockhammer & Alexander Guschanski & Karsten Köhler, 2014. "Unemployment, capital accumulation and labour market institutions in the Great Recession," Working Papers PKWP1406, Post Keynesian Economics Study Group (PKSG).

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