Evaluating the Effects of Fiscal and Monetary Policies on the Unemployment Duration in Industrial Countries

Document Type : Original Article

Authors

1 Ph.D. Candidate in Economics, Faculty of Economics and Administrative Sciences, University of Mazandaran, Babolsar, Iran

2 Associate Professor of Economics, Faculty of Economics and Administrative Sciences, University of Mazandaran, Babolsar, Iran

3 Professor of Statistics, Faculty of Mathematical Sciences, Shahid Beheshti University, Tehran, Iran

Abstract

We investigated the effects of fiscal and monetary policies on the conditional distribution of unemployment duration in industrial countries to understand how job search time reacts to macroeconomic policies. We use data from four advanced countries, including the United States, Canada, France, and Australia, over the last two decades and apply the Bayesian quantile method to do the empirical analysis. We also employed the Bayesian panel data model with heterogeneous slopes over cross-sections. The evidence shows that monetary and fiscal policies heterogeneously affect different parts of the distribution of unemployment duration. Also, estimates show that government budget surplus is positively correlated with all quantiles of unemployment duration. In addition, nominal interest rate is negatively associated with the lower parts of the unemployment duration distribution, while this correlation is positive for high quantiles. The estimates of the heterogeneous slopes model reveal that fiscal and monetary policies are more effective in the US compared to other countries.

Keywords

References

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Journal of Economics and Modelling
Volume 11, Issue 3 - Serial Number 43
December 2020
Pages 195-225

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