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Hysteresis in unemployment: Evidence from OECD estimates of the natural rate.
- Source :
- International Finance; Dec2022, Vol. 25 Issue 3, p268-284, 17p
- Publication Year :
- 2022
-
Abstract
- This paper studies the dynamics of unemployment (u) and its natural rate (u*), with u* measured by real‐time estimates for 29 countries from the Organization for Economic Cooperation and Development. We find strong evidence of hysteresis: an innovation in u causes u* to change in the same direction, and therefore has permanent effects. For our baseline specification, a one‐percentage‐point deviation of u from u* for 1 year has a long‐run effect of 0.16 points on both variables. When we allow asymmetry, we find, perhaps surprisingly, that decreases in u have larger long‐run effects than increases in u. [ABSTRACT FROM AUTHOR]
- Subjects :
- HYSTERESIS
UNEMPLOYMENT
TECHNOLOGICAL innovations
ECONOMIC development
Subjects
Details
- Language :
- English
- ISSN :
- 13670271
- Volume :
- 25
- Issue :
- 3
- Database :
- Complementary Index
- Journal :
- International Finance
- Publication Type :
- Academic Journal
- Accession number :
- 160853456
- Full Text :
- https://doi.org/10.1111/infi.12424