Monetary Policy and Swedish Unemployment Fluctuations

26 Pages Posted: 18 Dec 2010

See all articles by Annika Alexius

Annika Alexius

Stockholm School of Economics - Department of Economics

Bertil Holmlund

Uppsala University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Multiple version iconThere are 3 versions of this paper

Date Written: 2008

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

JEL Classification: J60, E24

Suggested Citation

Alexius, Annika and Holmlund, Bertil, Monetary Policy and Swedish Unemployment Fluctuations (2008). Economics: The Open-Access, Open-Assessment E-Journal, Vol. 2, 2008-4. Available at SSRN: https://ssrn.com/abstract=1726833 or http://dx.doi.org/10.5018/economics-ejournal.ja.2008-4

Annika Alexius

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden
+46-8-736 90 00 (Phone)
+46-8-31 32 07 (Fax)

Bertil Holmlund (Contact Author)

Uppsala University - Department of Economics ( email )

SE-75120 Uppsala
Sweden
+46 18 471 1122 (Phone)
+46 18 471 1478 (Fax)

HOME PAGE: http://www.nek.uu.se/faculty/holmlund/index.html

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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