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Appears in Collections:Economics Journal Articles
Peer Review Status: Refereed
Title: The European Unemployment Gap and the Role of Monetary Policy
Author(s): Napolitano, Oreste
Montagnoli, Alberto
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Keywords: Monetary Policy
Unemployment Gap
Markov Switching Model
Issue Date: May-2010
Citation: Napolitano O & Montagnoli A (2010) The European Unemployment Gap and the Role of Monetary Policy, Economics Bulletin, 30 (2), pp. 1346-1358.
Abstract: This study will shed some light on the debate on the impact of monetary policy on the labour market in Europe. The Phillips curve implies that demand-induced changes in inflation tend to lag behind movements in the unemployment rate, which means that a comparison between the actual unemployment rate and the NAIRU may be helpful in forecasting future changes in inflation. By using an unobserved component model with a Kalman filter we estimate the NAIRU for three countries in the euro area. Moreover, using a Markov switching model we investigate whether European monetary policy is responsible for these unemployment gaps and whether the interest rate is transmitted asymmetrically across countries.
Rights: Publisher allows this work to be made available in this repository. Published in Economics Bulletin, 30.2, pp.1346-1358, 05/2010, with the following policy: the Author retains the right to reuse or reproduce all work accepted for publication at the Economics Bulletin in any form he chooses subject to the sole condition that proper acknowledgment is made of its prior publication in Economics Bulletin.

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