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Optimal Monetary Policy Rules for Averting Productivity Induced Jobless Recoveries

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  • Hudgins, David
  • Shuai, Jie

Abstract

Although high productivity growth is a primary economic goal across nations, it can lead to short run adjustment problems when it temporarily achieves high levels. This may induce a jobless recovery when labor productivity is high while an economy is experiencing sluggish growth or a recession. This paper creates a framework for empirically modeling these effects. This model is used in the context of an optimal control framework in order to derive policy rules for guiding monetary policy during such episodes.

Suggested Citation

  • Hudgins, David & Shuai, Jie, 2006. "Optimal Monetary Policy Rules for Averting Productivity Induced Jobless Recoveries," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 2(2), pages 1-9.
    • Handle: RePEc:ags:reapec:50147
    DOI: 10.22004/ag.econ.50147
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    References listed on IDEAS

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    1. Franklin R. Shupp, 1976. "Optimal Policy Rules for a Temporary Incomes Policy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 43(2), pages 249-259.
    2. Ireland, Peter N, 1996. "The Role of Countercyclical Monetary Policy," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 704-723, August.
    3. Mark E. Schweitzer, 2003. "Another jobless recovery?," Economic Commentary, Federal Reserve Bank of Cleveland, issue Mar.
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    Cited by:

    1. Patrick M. Crowley & David Hudgins, 2021. "Okun’s law revisited in the time–frequency domain: introducing unemployment into a wavelet-based control model," Empirical Economics, Springer, vol. 61(5), pages 2635-2662, November.

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