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Monetary or fiscal stimulus can help only if unemployment is cyclical; otherwise, if unemployment is structural expansionary policies will lead only to inflation. Careful recent analyses indicate that unemployment is mainly cyclical in the US

Ilzetzki, Ethan and Pinder, Jonathan (2012) Monetary or fiscal stimulus can help only if unemployment is cyclical; otherwise, if unemployment is structural expansionary policies will lead only to inflation. Careful recent analyses indicate that unemployment is mainly cyclical in the US. British Politics and Policy at LSE (24 Oct 2012) Blog Entry.

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Abstract

Ethan Ilzetzki and Jonathan Pinder examine the US economic woes since the beginning of the recession and the policy response aimed at fighting unemployment. They find that monetary or fiscal stimulus can help only if unemployment is cyclical and that unemployment (now at 7.8%) is indeed mainly cyclical. The examination of the US experience provides valuable insight for the UK experience, currently undergoing a tough austerity programme with an unemployment rate hovering at 7.9%.

Item Type: Website (Blog Entry)
Official URL: http://blogs.lse.ac.uk/politicsandpolicy/
Additional Information: © 2012 The Author
Library of Congress subject classification: H Social Sciences > HB Economic Theory
H Social Sciences > HC Economic History and Conditions
Journal of Economic Literature Classification System: G - Financial Economics > G0 - General
J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies
Sets: Departments > Economics
Collections > British Politics and Policy at LSE
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 15 Feb 2013 10:04
URL: http://eprints.lse.ac.uk/48729/

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