Monetary Policy and Swedish Unemployment Fluctuations

Annika Alexius (annika.alexius@ne.su.se) and Bertil Holmlund (bertil.holmlund@nek.uu.se)

No 2007:17, Working Paper Series from Uppsala University, Department of Economics

Abstract: A widely spread belief among economists is that monetary policy has relatively short-lived effects on real variables such as unemployment. Previous studies indicate that monetary policy affects the output gap only at business cycle frequencies, but the effects on unemployment may well be more persistent in countries with highly regulated labor markets. We study the Swedish experience of unemployment and monetary policy. Using a structural VAR we find that around 30 percent of the fluctuations in unemployment are caused by shocks to monetary policy. The effects are also quite persistent. In the preferred model, almost 30 percent of the maximum effect of a shock still remains after ten years.

Keywords: Unemployment; Monetary policy; structural VARs (search for similar items in EconPapers)
JEL-codes: E24 J60 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2007-06-18
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Journal Article: Monetary Policy and Swedish Unemployment Fluctuations (2008)
Working Paper: Monetary policy and Swedish unemployment fluctuations (2008)
Working Paper: Monetary Policy and Swedish Unemployment Fluctuations (2007)
Working Paper: Monetary Policy and Swedish Unemployment Fluctuations (2007)
Working Paper: Monetary Policy and Swedish Unemployment Fluctuations (2007)
Working Paper: Monetary Policy and Swedish Unemployment Fluctuations (2007)
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