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This paper develops a panel unobserved components model of the monetary transmission mechanism in the world economy, disaggregated into twenty national economies along the lines of the Group of Twenty. This structural macroeconometric model features extensive linkages between the real and financial sectors, both within and across economies. A variety of monetary policy analysis and forecasting applications of the estimated model are demonstrated, based on a Bayesian framework for conditioning on judgment.

Monetary policy. --- Economic forecasting. --- Economics --- Forecasting --- Economic indicators --- Monetary management --- Economic policy --- Currency boards --- Money supply --- Banks and Banking --- Inflation --- Macroeconomics --- Production and Operations Management --- Interest Rates: Determination, Term Structure, and Effects --- Macroeconomics: Production --- Price Level --- Deflation --- Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) --- Finance --- Economic growth --- Output gap --- Short term interest rates --- Long term interest rates --- Business cycles --- Interest rates --- Production --- Economic theory --- Prices --- United States

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The human cost of the recent global crisis is reflected in its impact on the labor market. Explaining why economies with similar downturns had very different employment trends can help design policies to reduce such costs and improve labor markets. This paper analyzes the recent employment experiences of six economies: Germany, Korea, Mexico, New Zealand, Spain, and Sweden. These economies represent a wide range of labor market institutions, policy responses, and outcomes to the crisis. The divergence of labor market outcomes and of the effectiveness of policies during the crisis can be explained by the interaction between the nature of the shocks and differences in the structure and institutions of each country’s economy. The worst job losses compared to the drop in output followed permanent shocks, particularly in dual labor markets and in the presence of wage rigidities. Policies to avoid job cuts were much more effective when they were well-targeted and responded to temporary shocks. In contrast, policies to facilitate labor movements were more appropriate following permanent shocks.

Labor --- Macroeconomics --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Demand and Supply of Labor: General --- Labor Economics Policies --- Labor Economics: General --- Unemployment: Models, Duration, Incidence, and Job Search --- Labour --- income economics --- Labor markets --- Labor market policy --- Labor market --- Economic theory --- Manpower policy --- Labor economics --- Spain --- Income economics