Abstract
This chapter examines the long swings of employment, investment, and asset prices. It highlights one stylized fact that a model of the natural rate of unemployment should be able to take into account: the relationship among unemployment, investment, and share prices that is observed in the data. Although this relationship is often ignored, it provides a justification for some recent models of the natural rate. The chapter first considers a moving natural rate of unemployment before discussing the relationship between the long swings of employment and asset price swings. It then introduces a stripped-down natural rate model that generates a relationship among the natural rate of unemployment, investment, and asset prices. It also describes how financial crises are linked to changes in asset prices, investment, and employment.
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