Labor Force Participation and Monetary Policy in the Wake of the Great Recession
By C. Erceg, Andrew T. Levin. Social Science Research Network, 2013
171 citations recorded by the source corpus.
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.
View Paper: https://www.semanticscholar.org/paper/17dfeeafeb8f51cf1bfd26dfeb653578aaa13490
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- Ò. Jordà
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- Giuseppe Cavaliere
Citations in the corpus
- Innovation, Productivity, and Monetary Policy (2017, result): “These results are broadly consistent with those found by Erceg and Levin (2014), and result from the presence of a slow-moving state variable in the Taylor rule (technology in our case, and labor force participation in the case of Erceg and Levin (2014)).”
- The Long-Run Effects of Monetary Policy (2020, background): “Our paper is also related to the recent literature that emphasizes slow recovery following the Great Recession due to endogenous productivity growth (Anzoategui, Comin, Gertler, and Martinez, 2018; Bianchi, Kung, and Morales, 2019), labor force participation (Erceg and Levin, 2014; Galı́, 2016), or ”
- The Effect of the Global Financial Crisis on OECD Potential Output (2015, unknown): “See, for example, Erceg and Levin (2013) and Van Zandweghe (2012) for alternative views on the relative importance of demographic/trend and cyclical factors explaining the fall in US participation.”