Essays on macroeconomic policies after the crisis

The Global Financial Crisis (GFC) of 2007-2009 marked the deepest downturn in economic history since the Great Depression. Although the response of governments was different across countries, at least in advanced economies macroeconomic policy evolved around some common lines. This dissertation identifies three areas of intervention — (i) quantitative easing and forward guidance, (ii) fiscal austerity, and (iii) labor market deregulation — and studies the effects that each of them might have had on selected economic and financial variables. Chapter 2 focuses on the unconventional monetary policies undertaken by the U.S. Federal Reserve (Fed) in response to the GFC and shows that these have influenced the transmission of shocks across borders. Chapter 3 investigate the medium-term effects of tax-based consolidations on income disparity. The analysis suggests that increases in tax revenues in the aftermath of the GFC most likely did not contribute to increasing inequality. On the contrary, they might have lowered it. Chapter 4 investigates whether episodes of employment protection deregulation have detrimental effects on the distribution of income between labor and capital and find that that is indeed the case. Chapter 5 studies one of the effects of the GFC — namely the great rise in youth unemployment — rather than one of its policy responses. It shows that the response of the unemployment gap (the difference between the unemployment rate and its equilibrium rate) to cyclical demand conditions is generally twice as sensitive to the cycle for the youth as it is for adults, reflecting their more fragile employment conditions.