Monetary policy and unemployment in Croatia

Abstract

Achieving full employment is one of the most important economic policy tasks. Economic policy affects employment primarily through monetary and fiscal policies, which with their instruments affect aggregate supply and demand for goods and services. The aim of this article is to determine the impact of monetary policy on unemployment in Croatia. For this purpose, the bounds testing (ARDL) approach for cointegration is applied. The results indicate the existence of stable cointegration relationship between the variables and show that Croatian monetary policy is quite limited in reducing unemployment.