01788cas a2200253 a 4500 AALejournalIMF014062 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484301456 1018-5941 BD-DhAAL BD-DhAAL Erceg, Christopher. Labor Force Participation and Monetary Policy in the Wake of the Great Recession / Christopher Erceg, Andrew Levin. Washington, D.C. : International Monetary Fund, 2013. 1 online resource (60 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students In this paper, we provide compelling evidence that cyclical factors account for the bulk of the post-2007 decline in the U.S. labor force participation rate. We then proceed to formulate a stylized New Keynesian model in which labor force participation is essentially acyclical during 'normal times' (that is, in response to small or transitory shocks) but drops markedly in the wake of a large and persistent aggregate demand shock. Finally, we show that these considerations can have potentially crucial implications for the design of monetary policy, especially under circumstances in which adjustments to the short-term interest rate are constrained by the zero lower bound. Mode of access: Internet Levin, Andrew. IMF Working Papers; Working Paper ; No. 2013/245 Full text available on IMF http://elibrary.imf.org/view/journals/001/2013/245/001.2013.issue-245-en.xml IMF e-Library