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Author: Patrick Burke Publisher: ISBN: Category : Electronic dissertations Languages : en Pages : 0
Book Description
The first chapter gives an overview of the current literature on participation in the labor market. Special attention is paid to trends in participation since 2000. The role of demographic change in those trends is compared against other explanations. With the increasing focus on labor market participation at the United States Federal Reserve, the history of monetary policy changes and participation is also examined. The second chapter estimates a labor market matching model to get a more accurate measure of the market tightness elasticity of the job finding rate and unexplained residual. The estimation strategy in the second chapter follows the approach in Borowczyk-Martins et al. (2013) which models the autocorrelation structure of the unobserved component in the matching function to address simultaneity bias. This chapter then uses asset data present in the Survey of Income and Program Participation. This allows for the use of average household debt as an additional instrument to correct for measurement error. These results help characterize the recent shifts in the Beveridge curve and the decline of the matching rate between job seekers and job openings between 2008-2013. How important is labor supply for the ability of monetary policy to influence inflation and employment? Hiring costs alter the response of inflation to monetary policy. As shown in Kurozumi and Van Zandweghe (2010), adjustments in employment can make it difficult for monetary policy to reach its price stability and full employment targets. As the policy response is more vigorous in maintaining inflation around a target, that target becomes impossible to maintain. Recent fluctuations in the participation rate have led to a growing concern about the role of labor supply in monetary policy. This chapter shows that as labor supply becomes more elastic, the monetary authority is more likely to be able to stabilize the economy around its steady state targets. The central bank's response to cyclical unemployment is important for price level stability regardless of business cycle goals. Journal of Economic Literature codes: E12 E24 E31 E32 E52.
Author: Patrick Burke Publisher: ISBN: Category : Electronic dissertations Languages : en Pages : 0
Book Description
The first chapter gives an overview of the current literature on participation in the labor market. Special attention is paid to trends in participation since 2000. The role of demographic change in those trends is compared against other explanations. With the increasing focus on labor market participation at the United States Federal Reserve, the history of monetary policy changes and participation is also examined. The second chapter estimates a labor market matching model to get a more accurate measure of the market tightness elasticity of the job finding rate and unexplained residual. The estimation strategy in the second chapter follows the approach in Borowczyk-Martins et al. (2013) which models the autocorrelation structure of the unobserved component in the matching function to address simultaneity bias. This chapter then uses asset data present in the Survey of Income and Program Participation. This allows for the use of average household debt as an additional instrument to correct for measurement error. These results help characterize the recent shifts in the Beveridge curve and the decline of the matching rate between job seekers and job openings between 2008-2013. How important is labor supply for the ability of monetary policy to influence inflation and employment? Hiring costs alter the response of inflation to monetary policy. As shown in Kurozumi and Van Zandweghe (2010), adjustments in employment can make it difficult for monetary policy to reach its price stability and full employment targets. As the policy response is more vigorous in maintaining inflation around a target, that target becomes impossible to maintain. Recent fluctuations in the participation rate have led to a growing concern about the role of labor supply in monetary policy. This chapter shows that as labor supply becomes more elastic, the monetary authority is more likely to be able to stabilize the economy around its steady state targets. The central bank's response to cyclical unemployment is important for price level stability regardless of business cycle goals. Journal of Economic Literature codes: E12 E24 E31 E32 E52.
Author: Anastasia Burya Publisher: International Monetary Fund ISBN: Category : Business & Economics Languages : en Pages : 46
Book Description
Using the near universe of online vacancy postings in the U.S., we study the interaction between labor market power and monetary policy. We show empirically that labor market power amplifies the labor demand effects of monetary policy, while not disproportionately affecting wage growth. A search and matching model in which firms can attract workers by either offering higher wages or posting more vacancies can rationalize these findings. We also find that vacancy postings that do not require a college degree or technology skills are more responsive to monetary policy, especially when firms have labor market power. Our results help explain the “wageless” recovery after the 2008 financial crisis and the flattening of the wage Phillips curve, especially for the low-skilled, who saw stagnant wages but a robust decline in unemployment.
Author: Bedri Kamil Onur Tas Publisher: ISBN: Category : Languages : en Pages : 14
Book Description
We empirically analyze the effect of policy of the Federal Reserve on the US labor market using the PSID data set. We find that an increase in the federal funds rate decreases the probability that an individual is unemployed. Survival analysis indicates that a rise in the federal funds rate will increase the duration of unemployment. Policy actions of the Federal Reserve have significant effects on labor market dynamics. These results might have significant policy implications for the “dual mandate” of the Federal Reserve and other central banks.
Author: Christopher J. Erceg Publisher: International Monetary Fund ISBN: 1484301455 Category : Business & Economics Languages : en Pages : 60
Book Description
In this paper, we provide compelling evidence that cyclical factors account for the bulk of the post-2007 decline in the U.S. labor force participation rate. We then proceed to formulate a stylized New Keynesian model in which labor force participation is essentially acyclical during “normal times” (that is, in response to small or transitory shocks) but drops markedly in the wake of a large and persistent aggregate demand shock. Finally, we show that these considerations can have potentially crucial implications for the design of monetary policy, especially under circumstances in which adjustments to the short-term interest rate are constrained by the zero lower bound.
Author: Robert Shimer Publisher: Princeton University Press ISBN: 1400835232 Category : Business & Economics Languages : en Pages : 189
Book Description
Labor Markets and Business Cycles integrates search and matching theory with the neoclassical growth model to better understand labor market outcomes. Robert Shimer shows analytically and quantitatively that rigid wages are important for explaining the volatile behavior of the unemployment rate in business cycles. The book focuses on the labor wedge that arises when the marginal rate of substitution between consumption and leisure does not equal the marginal product of labor. According to competitive models of the labor market, the labor wedge should be constant and equal to the labor income tax rate. But in U.S. data, the wedge is strongly countercyclical, making it seem as if recessions are periods when workers are dissuaded from working and firms are dissuaded from hiring because of an increase in the labor income tax rate. When job searches are time consuming and wages are flexible, search frictions--the cost of a job search--act like labor adjustment costs, further exacerbating inconsistencies between the competitive model and data. The book shows that wage rigidities can reconcile the search model with the data, providing a quantitatively more accurate depiction of labor markets, consumption, and investment dynamics. Developing detailed search and matching models, Labor Markets and Business Cycles will be the main reference for those interested in the intersection of labor market dynamics and business cycle research.
Author: Ole Roste Publisher: Routledge ISBN: 1351504886 Category : Business & Economics Languages : en Pages : 214
Book Description
As a fundamental review and critique of activist economic policies, this book is a unique contribution to classical political economy. "Monetary Policy and Macroeconomic Stabilization" is about macroeconomic stabilization policy, with emphasis on the value of a distinct national monetary policy to growth. Ole Bjorn Roste's argument is for public officials to restrain themselves in the pursuit of policy. As the author notes: when you know less, you should do less.The history of modern macroeconomics started in 1936 with the publication of Keynes' "General Theory of Employment, Interest, and Money". The problems of the Great depression of the 1930s paved the way for a change of focus, from the long run to economic fluctuations in the short run, and from nominal to real variables, such as unemployment and aggregate output.Keynes offered clear policy implications in tune with the times. Because economic adjustment was slow, waiting for the economy to recover by itself was irresponsible. Particularly fiscal policy was essential to return to high employment. Monetary policy could affect aggregate demand through Interest rates, but was less important. Roste discusses the role of monetary policy, starting out with the implications of the theory of optimum currency areas (OCAs). This is followed by estimates of the output loss associated with disinflation policy (the sacrifice ratio) for six OECD economies. Further, Roste models the dynamic adjustment to negative, local labor-market shocks, with particular relevance to Scandinavia, in a final section.The idea that governments should pursue stabilizing fiscal or monetary policies with regard to real variables is often taken for granted by the public, if not by economists. Among the reasons for skepticism, is the presence of differing views on how economies really work, that the state of a given economy becomes known only after a time lag, and that economic agents react to policy and expectations of policy. For these reasons, the effects of policy are generally uncertain. This book explains why the role of history is critical to the study of macroeconomics.p>
Author: Mr.Olivier Coibion Publisher: International Monetary Fund ISBN: 1475505493 Category : Business & Economics Languages : en Pages : 57
Book Description
We study the effects and historical contribution of monetary policy shocks to consumption and income inequality in the United States since 1980. Contractionary monetary policy actions systematically increase inequality in labor earnings, total income, consumption and total expenditures. Furthermore, monetary shocks can account for a significant component of the historical cyclical variation in income and consumption inequality. Using detailed micro-level data on income and consumption, we document the different channels via which monetary policy shocks affect inequality, as well as how these channels depend on the nature of the change in monetary policy.
Author: Pierre-Richard Agénor Publisher: International Monetary Fund ISBN: 1451854781 Category : Business & Economics Languages : en Pages : 98
Book Description
This paper examines the role of the labor market in the transmission process of adjustment policies in developing countries. It begins by reviewing the recent evidence regarding the functioning of these markets. It then studies the implications of wage inertia, nominal contracts, labor market segmentation, and impediments to labor mobility for stabilization policies. The effect of labor market reforms on economic flexibility and the channels through which labor market imperfections alter the effects of structural adjustment measures are discussed next. The last part of the paper identifies a variety of issues that may require further investigation, such as the link between changes in relative wages and the distributional effects of adjustment policies.
Author: Patrick Burke
Author: Patrick Burke
Author: Sebastian Graves
Author: Anastasia Burya
Author: Bedri Kamil Onur Tas
Author: Christopher J. Erceg
Author: Robert Shimer
Author: Takushi Kurozumi
Author: Ole Roste
Author: Mr.Olivier Coibion
Author: Pierre-Richard Agénor