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Monetary Policy and Swedish Unemployment Fluctuations

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  • Holmlund, Bertil
  • Alexius, Annika

Abstract

A widely spread belief among economists is that monetary policy has relatively short-lived effects on real variables such as unemployment. Previous studies indicate that monetary policy affects the output gap only at business cycle frequencies, but the effects on unemployment may well be more persistent in countries with highly regulated labor markets. We study the Swedish experience of unemployment and monetary policy. Using a structural VAR we find that around 30 percent of the fluctuations in unemployment are caused by shocks to monetary policy. The effects are also quite persistent. In the preferred model, almost 30 percent of the maximum effect of a shock still remains after ten years. --

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Bibliographic Info

Article provided by Kiel Institute for the World Economy in its journal Economics: The Open-Access, Open-Assessment E-Journal.

Volume (Year): 2 (2008)
Issue (Month): 4 ()
Pages: 1-25

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Handle: RePEc:zbw:ifweej:6989

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Keywords: Unemployment; monetary policy; structural VARs;

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References

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Citations

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Cited by:
  1. Creel, Jérôme & Hubert, Paul, 2012. "Constrained discretion in Sweden," Research in Economics, Elsevier, Elsevier, vol. 66(1), pages 33-44.
  2. Ohlsson, Henry, 2011. "The legacy of the Swedish gift and inheritance tax, 1884–2004," European Review of Economic History, Cambridge University Press, Cambridge University Press, vol. 15(03), pages 539-569, December.
  3. Yang, Zan & Wang, Songtao & Campbell, Robert, 2010. "Monetary policy and regional price boom in Sweden," Journal of Policy Modeling, Elsevier, Elsevier, vol. 32(6), pages 865-879, November.
  4. Hakan Berument & Nukhet Dogan & Aysit Tansel, 2008. "Macroeconomic Policy and Unemployment by Economic Activity: Evidence from Turkey," ERC Working Papers, ERC - Economic Research Center, Middle East Technical University 0803, ERC - Economic Research Center, Middle East Technical University, revised Apr 2008.
  5. Ronald Schettkat & Rongrong Sun, 2009. "Nicht zu früh bremsen! - Der Einfluss der Geldpolitik auf die langfristige Wirtschaftsentwicklung in Deutschland und den USA-," Schumpeter Discussion Papers, Universitätsbibliothek Wuppertal, University Library sdp09003, Universitätsbibliothek Wuppertal, University Library.
  6. Ronald Schettkat & Rongrong Sun, 2009. "Monetary policy and European unemployment," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 25(1), pages 94-108, Spring.
  7. Nordmeier, Daniela & Weber, Enzo, 2013. "Patterns of unemployment dynamics in Germany," IAB Discussion Paper 201302, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  8. Islas-Camargo, Alejandro & Cortez, Willy W., 2011. "How relevant is monetary policy to explain Mexican unemployment fluctuations?," MPRA Paper 30027, University Library of Munich, Germany.
  9. Bas, Maria & Ledezma, Ivan, 2007. "Market Access and the Evolution of within Plant Productivity in Chile," Economics Papers from University Paris Dauphine 123456789/6913, Paris Dauphine University.
  10. Nordmeier, Daniela & Weber, Enzo, 2013. "Conditional Patterns of Unemployment Dynamics in Germany," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79958, Verein für Socialpolitik / German Economic Association.

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