Abstract
Adjustment Dynamics and the Natural Rate: An Account of UK Unemployment. This paper challenges what is the standard account of UK unemployment, namely that the major swings in over the past 25 years are due predominantly to movements in the underlying empirical natural rate of unemployment (NRU). Our analysis suggests that the British NRU has remained reasonable stable through time and that the medium-run swings in are due, instead, to very prolonged after-effects of persistent (transitory but long-lasting) shocks. We argue that (a) past UK labour market shocks have prolonged after-effects on due to interactions among different lagged adjustment processes in the labour market, (b) many of the important shocks that have hit the UK labour market over the past 25 years have been persistent, and (c) the persistence of the shocks is complementary to the persistence of the lagged adjustment processes in generating movements of UK unemployment.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.