Monetary rules and sectoral unemployment in open economies

William Craighead

Journal of Macroeconomics, 2014, vol. 40, issue C, 277-292

Abstract: A search-and-matching model of the labor market is incorporated into a small open economy model with nominal rigidities. This allows the behavior of tradable and nontradable sector unemployment rates to be studied 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.

Keywords: Monetary policy; Labor market search; Open economy; Exchange rates (search for similar items in EconPapers)
JEL-codes: E5 F4 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:40:y:2014:i:c:p:277-292

DOI: 10.1016/j.jmacro.2014.01.004

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