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Regional Effects of Monetary Policy in Sweden

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This paper investigates the effects on employment in 21 Swedish regions of a monetary policy shock using a VAR model with exogenous foreign variables for the 1993:1-2007:4 period. The regional impulse responses clearly indicate asymmetric effects in which employment falls significantly in some regions, while not changing significantly in others. These differences seem to stem from the interest and exchange rate channel, whereby regions with larger shares of employment in the goods sector and higher export intensity are adversely affected. In addition, there is one group of regions that, surprisingly, see increased employment in response to the same policy shock.

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  • Svensson, Emma, 2012. "Regional Effects of Monetary Policy in Sweden," Working Papers 2012:9, Lund University, Department of Economics, revised 01 Mar 2013.
  • Handle: RePEc:hhs:lunewp:2012_009
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    More about this item

    Keywords

    monetary transmission; vector autoregression (VAR); regional differences;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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