Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2012:9: Regional Effects of Monetary Policy in Sweden

Emma Svensson ()
Additional contact information
Emma Svensson: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

Abstract: This paper investigates the effects on employment in 21 Swedish regions of a monetary policy shock using a VAR model with exogenous foreign variables for the 1993:1-2007:4 period. The regional impulse responses clearly indicate asymmetric effects in which employment falls significantly in some regions, while not changing significantly in others. These differences seem to stem from the interest and exchange rate channel, whereby regions with larger shares of employment in the goods sector and higher export intensity are adversely affected. In addition, there is one group of regions that, surprisingly, see increased employment in response to the same policy shock.

Keywords: monetary transmission; vector autoregression (VAR); regional differences

JEL-codes: C32; E52; F41

32 pages, First version: April 28, 2012. Revised: March 1, 2013.

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