Journal article

Unemployment Duration, Fiscal and Monetary Policies, and the Output Gap: How do the Quantile Relationships Look Like?

Akbar Zamanzadeh, MK Chan, Mohammad Ali Ehsani, Mojtaba Ganjali

Economic Modelling | Elsevier | Published : 2020

Abstract

We use country-level panel data on average unemployment duration (AvgUD) to explore how the conditional distribution of AvgUD varies with primary fiscal balance (fiscal policy), short-term interest rate (monetary policy), and the state of the business cycle (output gap). We obtain the quantile estimates via a Bayesian quantile mixed effects model, which has so far received limited attention in economics. Our results reveal rich heterogeneity in both the sign and strength of these associations at different quantiles of AvgUD, in different gender and age groups, and in some transition economies that have markedly different labour markets. A higher fiscal balance/surplus is associated with high..

View full abstract

University of Melbourne Researchers

Grants

Funding Acknowledgements

This research is a part of the PhD thesis of the first author which was jointly supervised by the Department of Economics at the University of Mazandaran (UMZ) and the University of Melbourne, as well as the Department of Mathematics and Statistics at Shahid Beheshti University (SBU). The author acknowledges the support of the University of Melbourne during his stay as a visiting research scholar. We would like to thank Farshid Vahid, Efrem Castelnuovo and James Hansen for fruitful discussions. Zamanzadeh: University of Mazandaran and University of South Australia. Chan: Faculty of Business and Economics, the University of Melbourne. Ehsani: Faculty of Economics and Administrative Science, the University of Mazandaran. Ganjali: Faculty of Mathematics and Statistics, Shahid Beheshti University.