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The Asymmetric Effects of Monetary Policy on Job Creation and Destruction

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  • Pietro Garibaldi

Abstract

This paper presents theory and evidence on the asymmetric effects of monetary policy on job creation and job destruction. First, it solves a dynamic matching model and it shows how interest rate changes result in an asymmetric response of job creation and destruction. Second, it looks at how changes in the federal fund rate affect gross job flows in the U.S. manufacturing industry, and it finds evidence of asymmetry. Tight policy increases job destruction and reduces net employment changes. Conversely, easy policy appears ineffective in stimulating job creation.

Suggested Citation

  • Pietro Garibaldi, 1997. "The Asymmetric Effects of Monetary Policy on Job Creation and Destruction," IMF Working Papers 97/57, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:97/57
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Florio, Anna, 2006. "The asymmetric effects of monetary policy in a matching model with a balance sheet channel," Journal of Macroeconomics, Elsevier, vol. 28(2), pages 375-391, June.
    2. Pichette, Lise, 1998. "La politique monétaire a-t-elle des effets asymétriques sur l'emploi?," Staff Working Papers 98-17, Bank of Canada.
    3. Scott Schuh & Robert K. Triest, 1998. "Job reallocation and the business cycle: new facts for an old debate," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 42(Jun), pages 271-357.
    4. Anna Florio, 2005. "Asymmetric monetary policy: empirical evidence for Italy," Applied Economics, Taylor & Francis Journals, vol. 37(7), pages 751-764.
    5. Scott Schuh & Robert K Triest, 1998. "Job Reallocation And The Business Cycle: New Facts An Old Debate," Working Papers 98-11, Center for Economic Studies, U.S. Census Bureau.

    More about this item

    Keywords

    Monetary policy; Transmission of Monetary Policy; Job Creation; Job Destruction; Search Models; employment; job flows; net employment;

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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