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Monetary Rules and Sectoral Unemployment in Open Economies

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  • William D. Craighead

    (Department of Economics, Wesleyan University)

Abstract

This paper incorporates a search-and-matching model of the labor market into a “New Open Economy Macroeconomics” framework. This allows for an examination of the behavior of tradable and nontradable sector unemployment rates under alternative monetary rules. An examination of dynamics in response to shocks to productivity, world prices and interest rates, and foreign demand suggests that monetary rules that respond to prices of domestic output rather than consumer prices may be better able to stabilize unemployment.

Suggested Citation

  • William D. Craighead, 2012. "Monetary Rules and Sectoral Unemployment in Open Economies," Wesleyan Economics Working Papers 2012-001, Wesleyan University, Department of Economics.
    • Handle: RePEc:wes:weswpa:2012-001
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    File URL: http://repec.wesleyan.edu/pdf/bcraighead/2012001_craighead.pdf
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    References listed on IDEAS

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    Cited by:

    1. Zhang, Yahong, 2018. "Unemployment fluctuations in a small open-economy model with segmented labour markets: The case of Canada," The Quarterly Review of Economics and Finance, Elsevier, vol. 70(C), pages 6-20.

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    More about this item

    Keywords

    search-and-matching model; monetary rules;

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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