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The Impact of Monetary Policy on Unemployment Hysteresis

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  • Engelbert Stockhammer

    () (Vienna University of Economics and Business Administration)

  • Simon Sturn

    () (IMK at the Hans Boeckler Foundation)

Abstract

This paper 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 OECD countries for which the required data is available. The time period lasts from 1980 to 2007. The paper 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

Paper provided by IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute in its series IMK Working Paper with number 15-2008.

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Length: 28 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:imk:wpaper:15-2008

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Keywords: monetary policy; NAIRU; structual unemployment; hysteresis; endogenous NAIRU;

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References

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Cited by:
  1. Laurence M. Ball, 2009. "Hysteresis in Unemployment: Old and New Evidence," NBER Working Papers 14818, National Bureau of Economic Research, Inc.
  2. 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.

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