ECIN Replication files for "Persistent monetary policy in a model with involuntary unemployment"
Principal Investigator(s): View help for Principal Investigator(s) Elizaveta Lukmanova, Central Bank of Ireland and KU Leuven; Roman Goncharenko, Central Bank of Ireland and KU Leuven
Version: View help for Version V3
| Name | File Type | Size | Last Modified |
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application/zip | 727.6 MB | 04/03/2025 06:51:AM |
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text/plain | 10.2 KB | 04/28/2025 09:08:AM |
Project Citation:
Lukmanova, Elizaveta, and Goncharenko, Roman. ECIN Replication files for “Persistent monetary policy in a model with involuntary unemployment.” Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2025-04-28. https://doi.org/10.3886/E222081V3
Project Description
Summary:
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In a basic New Keynesian DSGE model with involuntary unemployment, we study the role of labor markets in the transmission of persistent monetary policy shocks that increase households' inflation expectations. The model predicts that, in contrast to the standard nominal interest rate shocks, labor market conditions can affect the outcomes of persistent monetary policy shocks suggesting a trade-off between inflation and output growth: restricted labor market access leads to higher inflation response with smaller effects on output. Using a VAR analysis, we further provide empirical evidence consistent with the predictions of our theoretical model.
Scope of Project
Subject Terms:
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Long-term monetary policy;
Long-run inflation expectations;
Labor market frictions;
Inflation target
JEL Classification:
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E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
E32 Business Fluctuations; Cycles
E52 Monetary Policy
E58 Central Banks and Their Policies
E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
E32 Business Fluctuations; Cycles
E52 Monetary Policy
E58 Central Banks and Their Policies
Manuscript Number:
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ECIN-Mar-2023-0107.R2
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