Unequal Unemployment Effects of COVID-19 and Monetary Policy across U.S. States

Journal of Behavioral Economics for Policy, Forthcoming

75 Pages Posted: 24 Mar 2020 Last revised: 22 Dec 2020

See all articles by Hakan Yilmazkuday

Hakan Yilmazkuday

Florida International University (FIU) - Department of Economics

Date Written: August 28, 2020

Abstract

This paper shows that daily Google trends can be used as an alternative to conventional U.S. data (with alternative frequencies) on unemployment, interest rates, inflation and coronavirus disease 2019 (COVID-19). This information is used to investigate the effects of COVID-19 and the corresponding monetary policy on the U.S. unemployment, both nationally and across U.S. states, by using a structural vector autoregression model. Historical decomposition analyses show that the U.S. unemployment is mostly explained by COVID-19, whereas the contribution of monetary policy is almost none. An investigation based on the U.S. states further suggests that COVID-19 and the corresponding monetary policy conducted based on nationwide economic developments have resulted in unequal changes in state-level unemployment rates, suggesting evidence for distributive effects of national monetary policy.

Keywords: COVID-19, Coronavirus, Unemployment, Interest Rate, Inflation

JEL Classification: J63, F66, I10

Suggested Citation

Yilmazkuday, Hakan, Unequal Unemployment Effects of COVID-19 and Monetary Policy across U.S. States (August 28, 2020). Journal of Behavioral Economics for Policy, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3559860 or http://dx.doi.org/10.2139/ssrn.3559860

Hakan Yilmazkuday (Contact Author)

Florida International University (FIU) - Department of Economics ( email )

11200 SW 8th Street
Miami, FL 33199
United States

HOME PAGE: http://faculty.fiu.edu/~hyilmazk/

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