Economics Department Seminar Series: Racial Unemployment and the Macroeconomy: The Role of Monetary Policy

Economics Department Seminar Series, which continues with its final talk of the semester with our own Dr. Andre Harrison presenting on “Racial Unemployment and the Macroeconomy: The Role of Monetary Policy” 

The talk will assess the heterogenous effects of recessionary episodes on unemployment rates by race. In particular, I will show that the unemployment rates of minorities are much more sensitive in response to economic turmoil when compared to the white unemployment rate. Moreover, I will highlight that the Federal Reserve’s response to recessions does little to mitigate the negative effects that these recessions have on the employment status of minorities, and instead, has historically benefited white employment. I then provide some policy recommendations aimed at making the indirect effects of monetary policy more equitable. Please see the abstract below for more details.

“This paper employs a sign-identified structural vector autoregressive (SVAR) model to examine the effects of recessionary supply and demand shocks on unemployment rates by race. I find that all unemployment rates increase in response to both types of adverse macroeconomic shocks, but Black and Hispanic unemployment rates are disproportionately affected relative to the White unemployment rate. Further, a large portion of the response of monetary policy to these shocks is systematically driven by the response of the White unemployment rate, with dynamics driven by minority unemployment rates contributing negligibly to the monetary policy response. In addition, I find that monetary policy’s response to adverse macroeconomic shocks does little to influence the response of minority unemployment rates to said shocks. I also show that historically, the monetary policy response to adverse demand shocks has not significantly contributed to fluctuations in minority unemployment rates but instead, has significantly lowered the White unemployment rate across time. Consequently, the response of monetary policy to adverse demand shocks played a negligible role in the evolution of minority unemployment rates.”

We look forward to seeing you there for what promises to be an interesting and informative presentation! More information concerning this and other presentations for this semester can be found on the Economics Department website (https://cla.csulb.edu/departments/economics/seminar-series/).