The measurement of the working market It is usually a statistic that is taken into account to make a diagnosis on how the company is doing. economy from a country.
However, Does the number of people who are working or not really factor into a nation’s monetary policy?
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Bibiana Taboada Arango and Mauricio Villamizar Villegas, members of the Board of Directors of the Bank of the Republicthey explain in their book ‘Myths and realities of monetary policy’that monetary policy aims to “bring the economy to levels of activity that are compatible with its potential and its condition of full employment, which is precisely where there are no price pressures“.
Employment.
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They mention that if one seeks to observe improvements in the structural levels in the economic framework, such as a “lower long-term unemployment rate and greater efficiency in labour market flows“Reforms are required”of fundamental and structural, not monetary policy adjustments“.
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“Price stability is the means to achieve the main objective and end point of monetary policy, which is precisely to lead the economy to a level where it operates at maximum capacity.“, they add.
Finally, they mention that, in the long term, the “dilemma“For monetary policy, it may disappear, because the level of full employment that is compatible with the potential production of the economy is, precisely, that which is made possible by price stability.
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Bank of the Republic.
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“Thus, to a large extent, what monetary policy seeks is to reduce fluctuations in the economy in the face of shocks of different nature, so that it returns to its long-term structural levels, where production and the labor market operate at full capacity, but without generating inflationary pressures.“, they conclude.
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