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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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Citations

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Cited by:
  1. David R. Howell, 2010. "Institutions, Aggregate Demand and Cross-Country Employment Performance: Alternative Theoretical Perspectives and the Evidence," Working Papers, Political Economy Research Institute, University of Massachusetts at Amherst wp228, Political Economy Research Institute, University of Massachusetts at Amherst.
  2. 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, Board of Governors of the Federal Reserve System (U.S.) 2013-77, Board of Governors of the Federal Reserve System (U.S.).
  3. Laurence M. Ball, 2009. "Hysteresis in Unemployment: Old and New Evidence," NBER Working Papers 14818, National Bureau of Economic Research, Inc.
  4. 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.
  5. Simon STURN, 2013. "Are corporatist labour markets different? Labour market regimes and unemployment in OECD countries," International Labour Review, International Labour Organization, International Labour Organization, vol. 152(2), pages 237-254, 06.
  6. Engelbert Stockhammer & Alexander Guschanski & Karsten Köhler, 2014. "Unemployment, capital accumulation and labour market institutions in the Great Recession," Working Papers, Post Keynesian Economics Study Group (PKSG) PKWP1406, Post Keynesian Economics Study Group (PKSG).
  7. Simon Sturn, 2011. "Labour market regimes and unemployment in OECD countries," IMK Working Paper, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute 6-2011, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

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