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Asymmetric effects of monetary policy

König, Jacob LU (2018) NEKH01 20181
Department of Economics
Abstract
This thesis analyses if macroeconomic policy has asymmetric effects on output and unemployment, comparing the effectiveness of monetary policy when the output gap is positive to when it is negative. Asymmetric effects may be present due to uncertainty and loss aversion, the downward-stickiness of prices, or financial market imperfections. The empirical analysis is conducted through a panel data regression, with data from Sweden, Norway, the UK, the Czech Republic, Canada, and the US, spanning from 1996Q1 to 2017Q4. The results show that monetary policy is more effective when the output gap is positive, and that the monetary policy conducted when it is positive is contractionary, and thus that contractionary monetary policy seems more... (More)
This thesis analyses if macroeconomic policy has asymmetric effects on output and unemployment, comparing the effectiveness of monetary policy when the output gap is positive to when it is negative. Asymmetric effects may be present due to uncertainty and loss aversion, the downward-stickiness of prices, or financial market imperfections. The empirical analysis is conducted through a panel data regression, with data from Sweden, Norway, the UK, the Czech Republic, Canada, and the US, spanning from 1996Q1 to 2017Q4. The results show that monetary policy is more effective when the output gap is positive, and that the monetary policy conducted when it is positive is contractionary, and thus that contractionary monetary policy seems more effective than expansionary, although the empirical study presents certain problems that bring the results into question. (Less)
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author
König, Jacob LU
supervisor
organization
course
NEKH01 20181
year
type
M2 - Bachelor Degree
subject
keywords
Asymmetric effects, monetary policy, the real interest rate, uncertainty.
language
English
id
8958936
date added to LUP
2018-09-24 14:55:04
date last changed
2018-09-24 14:55:04
@misc{8958936,
  abstract     = {This thesis analyses if macroeconomic policy has asymmetric effects on output and unemployment, comparing the effectiveness of monetary policy when the output gap is positive to when it is negative. Asymmetric effects may be present due to uncertainty and loss aversion, the downward-stickiness of prices, or financial market imperfections. The empirical analysis is conducted through a panel data regression, with data from Sweden, Norway, the UK, the Czech Republic, Canada, and the US, spanning from 1996Q1 to 2017Q4. The results show that monetary policy is more effective when the output gap is positive, and that the monetary policy conducted when it is positive is contractionary, and thus that contractionary monetary policy seems more effective than expansionary, although the empirical study presents certain problems that bring the results into question.},
  author       = {König, Jacob},
  keyword      = {Asymmetric effects,monetary policy,the real interest rate,uncertainty.},
  language     = {eng},
  note         = {Student Paper},
  title        = {Asymmetric effects of monetary policy},
  year         = {2018},
}