Monetary Policy Impacts Unemployment Rate Through Business Cycle and Inflation Variance
The study looked at how changes in inflation and the business cycle affect the unemployment rate in the US economy. They found that monetary policy impacts the business cycle, which then influences unemployment. Additionally, higher inflation variance leads to higher unemployment, showing there is no trade-off between the two. The researchers also discovered a one-way relationship where inflation variance affects unemployment, contrary to the traditional idea that unemployment affects inflation.