Changing business cycles: The role of women's employment

A column by Stefania Albanesi for VOX: CEPR’s Policy Portal

The US economy has been hampered over the last four decades by three trends:

• the productivity slowdown,
• the Great Moderation, and
• jobless recoveries.

Economists seeking to explain these phenomena have generally looked to the impact that technological change has on labour demand.

This column proposes an alternative explanation: the rise and stabilisation of women’s participation in the workforce, one of the most notable developments in the post-war US. Excluding gender differences in aggregate models of the US economy obscures our understanding of business cycle behaviour and economic performance.

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Unconventional Monetary Policies in the Euro Area, Japan, and the United Kingdom

an article by Giovanni Dell’Ariccia, Pau Rabanal and Damiano Sandri (International Monetary Fund, Washington, DC) published in Journal of Economic Perspectives Volume 32 Number 4 (Fall 2018)

Abstract

The global financial crisis hit hard in the euro area, the United Kingdom, and Japan. Real GDP from peak to trough contracted by about 6 percent in the euro area and the United Kingdom and by 9 percent in Japan.

In all three cases, central banks cut interest rates aggressively and then, as policy rates approached zero, deployed a variety of untested and unconventional monetary policies. In doing so, they hoped to restore the functioning of financial markets, and also to provide further monetary policy accommodation once the policy rate reached the zero lower bound.

In all three jurisdictions, the strategy entailed generous liquidity support for banks and other financial intermediaries and large-scale purchases of public (and in some cases private) assets. As a result, central banks' balance sheets expanded to unprecedented levels.

This paper examines the experience with unconventional monetary policies in the euro zone, the United Kingdom, and Japan.

The paper starts with a discussion of how quantitative easing, forward guidance, and negative interest rate policies work in theory, and some of their potential side effects. It then reviews the implementation of unconventional monetary policy by the European Central Bank, the Bank of England, and the Bank of Japan, including a narrative of how central banks responded to the crisis and the evidence on the effects of unconventional monetary policy actions.

JEL Classification: E23, E32, E43, E44, E52, G01, H63

Full text (PDF 26pp)

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The Great Recession and State Unemployment Trends

an article by William B. Beyers (University of Washington, Seattle, USA) published in Economic Development Quarterly Volume 27 Number 2 (May 2013)

Abstract

The recession that began in January 2008 was the deepest business downturn since the Great Depression of the 1930s.

This recession has been referred to as The Great Recession due to its severity and the length of its duration. As the U.S. economy has experienced a shift in its industrial structure toward an ever-larger service sector, there is a literature that argues that economic fluctuations should be less than was the case in a goods-production dominated economy, as it is presumed that the demand for services is less cyclical than the demand for goods.

The Great Recession challenges this presumption.

This article reports on the unemployment experience of states through the Great Recession with regard to their industrial structure, finding that there is a correlation between industrial structure and unemployment trends.

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Business cycles and wage rigidity

an article by Cristian Bartolucci (Collegio Carlo Alberto, Italy) published in Labour Economics Volume 19 Issue 4 (August 2012)

Abstract

In this paper, we analyze the impact of downward wage rigidity on the labor market dynamics.

We show that imposing downward wage rigidity in a matching model with cyclical fluctuations in productivity, endogenous match-destruction, and on-the-job search, quits are procyclical and layoffs countercyclical.

Using the European Community Household Panel (ECHP), we provide evidence that downward wage rigidity is empirically relevant in ten European countries.

Finally, we show that layoffs are countercyclical and quits are procyclical, as predicted by the model.

Graphical abstract This does not copy well so please go here to view. If you are really interested in this then you will need to access the actual journal through your institution or purchase.

Highlights

► This paper analyzes the impact of downward wage rigidity on the labor market.
► In a matching model with downward wage rigidity, quits are procyclical.
► In the model layoffs countercyclical.
► In Europe, downward wage rigidity is empirically relevant.
► Layoffs are countercyclical and quits are procyclical, as predicted by the model.

JEL classifications: J63; J41; E3

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