The Asymmetric Effects of Monetary and Fiscal Policies on Unemployment: The Turkish Case

In this study, it is aimed to compare the effectiveness of monetary and fiscal policy as well as to compare the effectiveness of expansionary- contraction policy by investigating the asymmetric effects of monetary and fiscal policies on unemployment with positive-negative shock asymmetry. In addition, it is aimed to contribute to the literature by testing the asymmetric effects of price, exchange rate and output shocks on unemployment, apart from monetary and fiscal policies. The analysis was carried out with monthly data covering the period 2005:12-2019:08 and the NARDL method was used in the analysis. Obtained findings revealed that the effective fiscal policy tool is decrease in taxes while the effective monetary policy tool is the decrease in interest rate to reduce unemployment. It has been found that increases in public expenditures and money supply increase unemployment, so the Abrams Curve Hypothesis is valid in the period under consideration.