Natural Rate Of Unemployment Research Articles

A civil society organisation response to water service delivery issues in South Africa drives transformative praxis. Part 2: Knowledge building, learning and active citizenship

Human capacity growth in knowledge and innovation is crucial if South Africa is to achieve developmental goals such as efficient, sustainable and equitable water resource management. About 80 percent of the South African population comprises socially and economically disadvantaged people, living in township areas (urban areas previously allocated to Black residents during the apartheid era) that experience low household water security and lack water-related knowledge capacity. For example, the national unemployment rate is 36.3%, and in the region of the study, the Eastern Cape, is 44.5%. An integrated approach to water resource management requires meaningful participation of water stakeholders in management processes. Civil society organisations championing practices to address water service delivery issues in their local communities are well placed to build their individual capacity and foster community capacity development and active citizenship around water issues. This paper explores the learning experiences of a civil society organisation, Water for Dignity (WfD), as they addressed water service delivery issues in the Makana Local Municipality, in the Eastern Cape of South Africa. The learning process of the WfD group was explored through the retrospective analysis of data collected through participatory action research, at the WfD group, and wider community level. Learning within the WfD group was analysed through a communities of practice lens. Learning between WfD and the wider community was analysed through using a social learning lens. Learning at WfD team level occurred in four ways, through learning as belonging, learning as doing, learning as experiencing and learning as becoming. Social learning that occurred at a community level related mainly to personal water rights and best practices for improving water quality and water conservation. These were fostered mainly through structured citizen engagements offered by WfD. The research provides evidence that civil society organisations can play an important role in bridging water-related knowledge gaps and can foster active citizenship in South African communities.

Germany’s Growth Prospects against the Backdrop of Demographic Change

AbstractThis paper shows how the German Council of Economic Experts (GCEE) determines Germany’s potential output, and compares the results with those of the European Commission. The approach of the European Commission is a natural benchmark, as it provides the basis for the deficit and debt rules of the European Union. In comparison with the European Commission’s method, the GCEE’s method places greater emphasis on demographic factors in estimating labour input. Additionally, both approaches differ regarding how they estimate the structural unemployment rate and total factor productivity. Finally, this paper discusses the limitations of, and the different options for estimating potential output.

Business Cycles, Optimal Interest Rate, and Recession Forecast From Yield Curve, Unemployment, GDP, and Payrolls

We developed a factor regression model, nicknamed “GUPTY”, to study the business cycles, and their relation to the monetary policy. It covers several major macro-economic quantities, including unemployment rate, GDP, and weekly payrolls in the U.S. after WWII. The model postulates that these macro-economic quantities are predominantly a nonlinear function of the 10Y and 3M interest rates in the Treasury yield curve, and their regressions share similar model specification. The concept of the business cycle is injected into the model through the yield spread between 10Y and 3M rates. The notion of the natural rate of unemployment and GDP growth comes out of the model naturally. An optimization framework is proposed to determine the optimal short-term interest rate, which is a central concern for policymakers – Once the model parameters are obtained from regressions, the model is inverted to calculate the optimal 3M rate via optimization of the squared errors. Its first-order analytic solution is derived. We find that FED’s interest rate policy has leaned heavily on the unemployment data. We also observe that, on the optimality, the model GDP growth rate matches the realized data almost perfectly. We discuss some policy challenges, and attempt to provide an explanation for the plunge of GDP growth after 2009 due to super-low 10Y rate, in which the “2% GS10 floor hypothesis” is suggested. Unemployment’s 1Y momentum and its 6M acceleration are used to construct a Hidden Markov Model for real-time recession probability. Furthermore, a Random Forest model is developed to forecast recession up to 24 months ahead. And we show recession forecast is closely associated with yield spread inversion.

On the financial market impact of euro area monetary policy: A comparative study before and after the Global Financial Crisis

Using daily data from thirteen euro area and four non-euro countries covering the years 2000 to 2018, we explore whether the Global Financial Crisis 2008–2010 and the introduction of unconventional monetary policy measures has led to a change in the financial market impact of euro area monetary policy. For this purpose, we construct a conservative measure of monetary policy innovations based on the heteroscedasticity-approach of Rigobon and Sack (2004), and investigate the response of national and euro-wide equity indices, derived volatility indices, as well as of government bond yields. We find that financial market participants respond more strongly to monetary policy after the Global Financial Crisis. Moreover, we find that cross-country differences in the responsiveness of government bond yields correlate with average national unemployment rates and with inflation rates, suggesting that monetary policy communication was more effective in countries that had faced a severe economic downturn.

Europeanisation and the Youth Guarantee: The case of France

In 2013, the European Council approved the Youth Guarantee (YG) to counteract youth unemployment. Because of its specific features, the YG is useful for understanding whether the EU has triggered policy change in national youth unemployment policies. Contrary to most of the literature on similar topics, we focused in this study on the effect of this specific European measure rather than on broader EU strategies or policies. The study contributes to the literature by qualifying the degree of fit/misfit and suggesting a counterfactual analysis, using the case of France. We first situate the article within the broader Europeanisation debate and present our research design. The second section introduces the policy structure of the YG and investigates youth unemployment policy in France, prior to and after the European initiative. The third section discusses whether the French youth unemployment policy would have been developed in the same way without the YG. A final section concludes.

MEASURING THE PERFORMANCE OF REGIONAL GOVERNMENT: USING DATA ENVELOPMENT ANALYSIS (DEA) APPROACH

<p><em>The realization of regional government expenditure in Aceh Province from 2011 – 2015 has reached the figure of </em><em>Rp84.260.616.926.552,00.</em><em> However, the indicator data of Aceh people’s welfare in 2016 provided information of unemployment rate in Aceh in 2015 at 9,93%. This exceeds the national unemployment rate in the same period of 6.2%</em><em>. Likewise, the poverty rate of Aceh Province in 2015 was at 17.08%. While nationally, the unemployment </em><em>rate </em><em>was at 11.13%. </em></p><p><em>This condition indicated that the regional government were still unable to prosper the people, which also means that the governments were underperformed. This was possible because of inefficient use of resources. Efficiency does not only apply to private sector but also public sector. public sector organizations are now required to be able to operate efficiently to improve the performance. Nowadays, the performance of the local government has been criticized by the public</em><em>.</em><em> Therefore, it is necessary to develop a performance measurement toward public organization to know the extent of performance in a certain period accurately. </em><em>This study aims to determine the efficiency level of regency / city governments in Aceh Province. By using the Data Envelopment Analysis (DEA) approach, it is possible to observe which regency / city governments are performing well. This study uses input variables including regional expenditure, assets, population, civil servants and area. Output variables used include Regional Original Income (PAD), Human Development Index (HDI) and Per capita Income.</em><em></em></p><p><em>The result show</em><em>s</em><em> that from 23 regency / city governments in Aceh Province, in the overall average from 2011 - 2015, there were only 5 regency / city governments (21.74%) who were efficient in running their government (efficiency score 1.00) , namely Banda Aceh, Langsa, Lhokseumawe, Sabang and Subulussalam. </em><em>Therefore,</em><em> the regency / city government has a good performance.</em><em></em></p><pre><strong><em>Keywords</em></strong><strong><em>: </em></strong><em>Performance and DEA</em><em>, </em><em>Regency / city governments</em></pre>

Regional-Specific Determinants of Non-Performing Loans

This paper investigates the determinants of non-performing loans in the Armenian banking sector during the period 2004-2016. The study is motivated by the hypothesis that both macroeconomic and regional-specific variables have an effect on loan quality. The study uses macroeconomic and regional specific factors to identify the determinants of NPLs of Armenian banks. To our best knowledge this study is the first to analyse the detriments of both national and foreign currency NPLs on regional level. I analyze NPLs in national currency and foreign currency, the results suggest NPLs in national currency are more driven by macroeconomic factors than NPLs in foreign currency. The analysis includes fundamental determinants of the NPL, such as GDP, wages, interest rate, housing price, return on assets, loan loss. The results suggest that the NPL is sensitive to interest rate in national currency and unemployment in almost all samples. I find statistically significant effects of wage increases on NPLs in OLS and FE models. The impact of the financial crisis is incorporated into the model by using a financial crisis dummy, the crisis dummy variable takes the value one for years 2008, 2014, while is zero for years 2004-2016. I used GMM dynamic panel data methods in order to estimate the effect of regional economic determinants of non-performing loans. After the application of the method of panel data we found the problem loans very negatively with the growth rate of GDP, the profitability of banks' assets (ROA) and positively with the unemployment rate, house prices.

Inflation Targeting in Iran

Inflation targeting in various forms has been adopted by a number of countries as a framework for making monetary policy more coherent and transparent and for increasing the credibility of monetary policy. Despite the language, referring to inflation target as the primary objective of monetary policy, central bankers always make room for short-run stabilization objectives, particularly with respect to output and exchange rate. Inflation targeting, in most cases, reduces the role of intermediate targets, such as exchange rate or money growth rate.
 Experience of other countries that have adopted inflation targeting as a monetary framework reveals that the success of the policy depends on not only the transparency of the operation but also on the budgetary discipline. Indeed, the central banks that have become more transparent, more independent, more coherent, and more accountable and more credible have been more successful.
 The controversy among economists on the expenses of inflation targeting has attained particular attention during the past decades .While opponents believe that inflation targeting takes place at the expense of output shortfalls (Cechetti and Ehrmann 1999), proponents (Mishkin 2000, Jonas and Mishkin 2003) believe that inflation targeting promotes investment and economic growth. This paper tries to address the question of whether the performance of inflation targeting in Iran has been successful. Based on a monetary model, using exogenous variables such as official exchange rate, budget deficit, foreign exchange obligation account, and balance of payments, the results suggest that the effects of inflation targeting on the real output is trivial, supporting the natural rate hypothesis.

The dynamic effects of monetary policy and government spending shocks on unemployment in the peripheral Euro area countries

In this paper we study the response of unemployment to monetary policy and government spending shocks in the peripheral Euro-area countries. By applying the structural near-VAR methodology, we jointly model area-wide and national variables. Our main finding is that fiscal multipliers vary across countries and the results are consistent with the prediction of the standard New Keynesian model only in Italy and Greece. Instead, in Ireland, Portugal and Spain increases in government spending are recessionary. Thus we find that Keynesian results of fiscal policy seem to prevail in high public-debt countries, whereas non-Keynesian outcomes seem to characterize high private-debt countries. As for the monetary policy shock, we find that it plays an important role, jointly with the other area-wide shocks, as a long-term driver of national unemployment.

Determinants of the wage gap in Ecuador: analysis under a minceriano model related to dummy aggregate variables

Introduction The Human Capital Theory exposes that inequality in labor income is due to different factors, including productivity and education. Objectiveanalyze income inequality in the Ecuadorian labor market. The research takes data from the National Employment, Unemployment and Underemployment Survey of INEC estimating the Mincerian equation (1974) by adding dummy variables.Materials and methods The research takes data of secondary information that rests in the ENEMDU survey updated to December 2018 that includes the characteristics of the EAP in Ecuador. Resultscharacterization of the gender variable, schooling positively influences their hourly wages. Discussion Regarding the gender variable, this long term of not correcting the salary differences may have an impact on old age. ConclusionsWhen there is gender discrimination, it is imperative to identify and quantify the jobs and professions to which women have access in a lesser proportion.

Time variation in the persistence of unemployment over the past century

This paper investigates the persistence of the unemployment rate for the UK and the US over the past century by modeling the persistence to randomly evolve over time. The estimated autoregressive coefficient exhibits significant variation over time indicating the fluctuation between the hysteresis and mean-reverting phases. We find that the hysteresis phase is, to a considerable extent, associated with economic downturns caused by macroeconomic shocks, with the unemployment rate during this phase showing large deviations from the estimated natural rate of unemployment. In contrast, for the periods conforming to the natural rate theory, the actual unemployment rate fluctuates relatively closely around the estimated natural rate of unemployment.

ABD İşgücü Piyasasında Histeresi Etkisi Üzerine Ampirik Bir Çalışma: Yeni Keynesyen Ücret Phillips Eğrisi (1990-2014)

This study investigates the concept of hysteresis for the US economy vs natural rate hypothesis during (1990:Q1-2014:Q4). Mainstream economics accepts the natural rate in the long run vs high and persistent unemployment idea of hysteresis. Unit root tests detect the nonstationarity of (un)employment series which may indicate hysteresis. Next, macroeconomic background is presented, and human capital or insider-outsider approaches are explained. With the (NKWPC) model, wage inflation is estimated with (un)employment variables and further with the output gap and growth of excess demand. Results reveal no hysteresis patterns except with the rate of change (ROC) of output during 2001 recession. Demand shocks or labour market factors may be causing nonstationarity of (un)employment according to which economic policy choice should be made regarding: demand management policies vs. labour market measures.

Longitudinal Fluctuations of National Help-Seeking Reports for Domestic Violence Before, During, and After the Financial Crisis in Cyprus.

Although many studies generally agree that unemployment may affect domestic violence, little is known about these effects in small nations. The relationship between unemployment and domestic violence in large and small nations may be different. This is because small nations have more expensive public sectors and limited employment opportunities in comparison with larger nations. We examined how longitudinal rates of national help-seeking domestic violence contacts (DVCs) from the only nongovernmental domestic violence support agency in Cyprus (a small nation) fluctuated in relation to national unemployment data between 1996 and 2016. This period included an economic crisis which commenced in 2011 and showed signs of recovery in 2015. We analyzed whether the fluctuations in unemployment registrations could predict changes in DVCs. Our analysis included 5,103,120 unemployment registrations and 21,774 DVCs. Findings supported our hypothesis and revealed unemployment predicted and correlated with DVCs. There were significant changes to DVCs when Cyprus plunged into economic crisis, meaning that when unemployment increased, DVCs also increased. Cyprus does not deviate from larger societies in help-seeking behavior in the form of people contacting a national helpline when exposed to economic crises. This study provides evidence of the link between economic hardship and increased help-seeking behaviors in small nations. Societies at risk of an economic crisis need to consider the potential impact on domestic violence rates and on demand for support services.

Determinants of the wage gap in Ecuador: analysis under a Minceriano model related to dummy aggregate variables

Introduction Work includes schooling and experience as explanatory variables of the level of salaries; It has been considered important to incorporate others in this research, these being: gender, area where the work activity takes place and having knowledge of another language. Objective of the present investigation is to analyze income inequality in the Ecuadorian labor market. Materials and methods The research takes data from the National Employment, Unemployment and Underemployment Survey of INEC estimating the Mincerian equation (1974) by adding dummy variables. Results the estimations allow to conclude that there is actually female and rural discrimination with respect to the salaries that the masculine gender has and in general of the workers who come from residential zones. Discussion. all the variables included in the model, experience is the one with the lowest incidence, anyway Conclusions establishes that the result is consistent with what the Ecuadorian legislation indicates, specifically the Internal Control Regulations.

Socioeconomic Status and Macroeconomic Expectations

Abstract We show that individuals’ macroeconomic expectations are influenced by their socioeconomic status (SES). People with higher income or higher education are more optimistic about future macroeconomic developments, including business conditions, the national unemployment rate, and stock market returns. The spread in beliefs between high- and low-SES individuals diminishes significantly during recessions. A comparison with professional forecasters and historical data reveals that the beliefs wedge reflects excessive pessimism on the part of low-SES individuals. SES-driven expectations help explain why higher-SES individuals are more inclined to invest in the stock market and more likely to consider purchasing homes, durable goods, or cars. Received November 13, 2017; editorial decision February 12, 2019 by Editor Wei Jiang. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Dynamika bezrobocia w Polsce w latach 1992-2017

Two alternative approaches can be found in the literature on the dynamics of unemployment. The first approach is based on the theory of a natural rate of unemployment. Under this theory, the economy can depart from the natural rate of unemployment in the short term due to nominal shocks, but in the long term the economy is expected to achieve an equilibrium indicated by the natural rate of unemployment. The second approach to the dynamics of unemployment is the so-called hysteresis of unemployment theory. According to this theory, all shocks to unemployment will have a permanent effect on the natural rate of unemployment. In a statistical sense, these two theories boil down to testing the unit root. If the unemployment rate is a non-stationary series with a unit root, then the hysteresis-in-unemployment hypothesis has to be accepted. On the other hand, if the unemployment rate is a stationary series then the hysteresis hypothesis is rejected in favour of the natural rate theory.

What’s the natural rate of unemployment? Answers from forecasters

ABSTRACTFor its panel survey of professional macroeconomic forecasters, the US Federal Reserve asks panelists whether they use the ‘natural rate of unemployment’ (NRU) or ‘non-accelerating inflation rate of unemployment’ (NAIRU) in formulating their forecasts and, also, to estimate the NRU/NAIRU. This paper studies responses and non-responses to those questions in order to interrogate forecasters’ views of the NRU/NAIRU. We find that most panelists in most years say they do not use the NRU/NAIRU, and they do not provide an estimate of it. Among those who do, their NRU/NAIRU estimates differ but usually do not differ significantly from the average of recent unemployment rates. We fail to find much evidence – in either their inflation and unemployment forecasts, NRU/NAIRU estimates, or revisions to those estimates over time – that panelists who use the NRU/NAIRU treat it as an unemployment rate below which inflation rises and above which inflation falls. Finally, we find that the NRU/NAIRU has no informational value for panelists who say they use it; they are no better at accurately forecasting inflation or unemployment.

The Phillips curve and the role of monetary policy in Chile

ABSTRACTIn this paper, the empirical analysis finds that the dynamics of inflation and unemployment can be described by a Phillips curve when allowing for a positive co-movement between trend-adjusted productivity and unemployment. This suggests that improvements in productivity have been achieved by laying off the least productive part of the labor force. Furthermore, the natural rate of unemployment is a function of the long-term interest rate, indicating that monetary policy is not completely neutral in the long run. This result rejects the natural rate hypothesis and, at the same time, provides empirical support for the structural slump theory in a world of imperfect knowledge. The recent theory of imperfect knowledge economics (IKE) seems to address the problem that many economic models lack: persistence in the observed data. By combining IKE and the structural slumps theory it is possible to obtain predictions that are theoretically and empirically consistent.

A Unified Approach to Measuring u*

This paper bridges the gap between two popular approaches to estimating the natural rate of unemployment, u*. The first approach uses detailed labor market indicators such as labor market flows, cross-sectional data on unemployment and vacancies, or various measures of demographic changes. The second approach which comprises reduced form models and DSGE models relies on aggregate price and wage Phillips curve relationships. We combine the key features of these two approaches to estimate the natural rate of unemployment in the United States using both data on labor market flows and a forward-looking Phillips curve linking inflation to current and expected deviations of unemployment from its unobserved natural rate. We estimate that the natural rate of unemployment is around 4.0% toward the end of 2018 and that the unemployment gap is roughly closed. Identification of a secular downward trend in the unemployment rate, driven solely by the inflow rate, facilitates the estimation of u*. We identify the increase in labor force attachment of women, decline in job destruction and reallocation intensity, and dual aging of workers and firms as the main drivers of the secular downward trend in the inflow rate.

A Unified Approach to Measuring u*

This paper bridges the gap between two popular approaches to estimating the natural rate of unemployment, u*. The first approach uses detailed labor market indicators, such as labor market flows, cross-sectional data on unemployment and vacancies, or various measures of demographic changes. The second approach, which employs reduced-form models and DSGE models, relies on aggregate price and wage Phillips curve relationships. We combine the key features of these two approaches to estimate the natural rate of unemployment in the United States using both data on labor market flows and a forward-looking Phillips curve that links inflation to current and expected deviations of unemployment from its unobserved natural rate. We estimate that the natural rate of unemployment was around 4.0 percent toward the end of 2018 and that the unemployment gap was roughly closed. Identification of a secular downward trend in the unemployment rate, driven solely by the inflow rate, facilitates the estimation of u*. We identify the increase in labor force attachment of women, decline in job destruction and reallocation intensity, and dual aging of workers and firms as the main drivers of the secular downward trend in the inflow rate.