Slow Recoveries and Unemployment Traps: Monetary Policy in a Time of Hysteresis*

• 成果类型: Article
• 署名作者: Acharya, Sushant; Bengui, Julien; Dogra, Keshav; Wee, Shu Lin
• 署名单位: Bank of Canada; Centre for Economic Policy Research - UK; Federal Reserve System - USA; Federal Reserve Bank - New York
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1093/ej/ueac016
• 发表日期: 2022
• 页码: 2007-2047
• 关键词: stagnation; inflation

摘要

We analyse monetary policy in a model where temporary shocks can permanently scar the economy's productive capacity. Workers lose skill while unemployed and are costly to retrain, generating multiple steady-state unemployment rates. Following a large shock, unless monetary policy acts aggressively and quickly enough to prevent a significant rise in unemployment, hiring falls to a point where the economy recovers slowly at best-at worst, it falls into a permanent unemployment trap. Monetary policy can only avoid these outcomes if it commits in a timely manner to more accommodative policy in the future. Timely commitment is essential as the effectiveness of monetary policy is state dependent: once the recession has left substantial scars, monetary policy cannot speed up a slow recovery, or escape from an unemployment trap.