Ensuring Economic and Employment Stability - Network for the Analysis of the Economic Policy Implications of an Integrated Labor Market and Business Cycle Research

Market economies experience frequent swings in economic activities, with periods of prosperity followed by periods of recessions. Although recessions are temporary in nature, they can at times be very persistent. Recessions are of particular concern for the public and policymakers because they are associated with lower standards of living as a result of continued decline in output or output growth, lower income, higher unemployment and underutilization of resources. At the same time, firms are forced to engage in the costly process of hiring and laying off workers due to macroeconomic disturbances beyond their control. Moreover, governments face problems about their fiscal and budgetary positions due to reductions in tax revenues and increases in public expenditure on social security programs. Devising appropriate policies that help minimize the social misery generated by business cycles is, therefore, of paramount importance to policymakers and the public. The policy-oriented network project addresses the link between business cycles and unemployment. Our aim is to offer sound explanations for the size and persistence of business cycle fluctuations and on the other hand the project opens the door for a better macroeconomic policy design that reduces the severity of recessions, and brings about faster economic recovery.

Cooperation: Centre de Recerca en Economia Internacional (Universitat Pompeu Fabra), Cologne Institute for Economic Research, Deutsche Bundesbank, European Central Bank, Germany Institute for Employment Research, Macroeconomic Policy Institute, South African Reserve Bank, University of Pretoria, University College London, University of Aarhus, University of Pavia

Contact: 
Christian Merkl and Mewael Tesfaselassie
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