EFFECTS OF MACROECONOMIC POLICY SHOCK ON THE LABOUR MARKET DYNAMICS IN AUSTRALIA

MUKTI NATH SUBEDI

Abstract:

Inspired by fiscal and monetary policy performance during global financial crisis (GFC) of 2007-08, this study investigates the effects of macroeconomic policy shocks on the labour market dynamics in Australia using a vector auto-regression (VAR) method. This study examines the dynamic response of output, unit labour cost, total hours worked and employment to changes in government spending and cash rate for 1985:3-2015:1. The results suggest that in response to positive cash rate shock total hours worked and employment react negatively, whereas unit labour cost reacts positively. On the other hand, in response to positive government spending shock, total hours worked and employment response positively, whereas, unit labour cost responds negatively.

Keywords:
Labour market, Vector Autoregression, Macroeconomic policy

DOI: 10.20472/ES.2016.5.1.005

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APA citation:
MUKTI NATH SUBEDI (2016). Effects of macroeconomic policy shock on the labour market dynamics in Australia. International Journal of Economic Sciences, Vol. V(1), pp. 71-85. , DOI: 10.20472/ES.2016.5.1.005


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