Supported by: Anniversary Fund of the Oesterreichische Nationalbank
Study by: Austrian Institute of Economic Research
This research project aims to investigate the impact of structural changes in the labour market on the effectiveness of monetary
policy. While a large number of studies focus on the relationship between labour market rigidities and labour market outcomes,
work on the relationship between structural features of the labour market and inflation is rather scarce. From a theoretical
perspective, we will use a dynamic stochastic general equilibrium (DSGE) model. The predictions of the theoretical model are
empirically tested using an interactive vector autoregressive panel model (IPVAR), in which the role of structural labour
market conditions on the effectiveness of monetary policy on the aggregate economy is quantified. The project focuses on OECD
countries and, in particular, on euro area countries and ECB monetary policy. The results allow to assess the usefulness of
continuous monetary stimulus and are therefore of particular relevance for economic policy.