Unemployment equilibria and input prices: Theory and evidence from the United States

Carruth, Alan and Hooker, Mark A. and Oswald, Andrew J. (1998) Unemployment equilibria and input prices: Theory and evidence from the United States. Review of Economics and Statistics, 80 (4). pp. 621-8. ISSN 0034-6535. (The full text of this publication is not available from this repository)

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Official URL
http://dx.doi.org/10.1162/003465398557708

Abstract

The paper develops an efficiency-wage model in which input prices affect the equilibrium rate of unemployment. We show that a simple framework based on only two prices (the real price of oil and the real rate of interest) is able to explain the main postwar movements in the rate of U.S. joblessness. The equations do well in forecasting unemployment many years out of sample, and provide evidence that the oil-price spike associated with Iraq's invasion of Kuwait appears to be a component of the "mystery'' recession that followed.

Item Type: Article
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HB Economic Theory
Q Science > QA Mathematics (inc Computing science)
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: I. Ghose
Date Deposited: 05 Apr 2009 08:15
Last Modified: 14 May 2014 10:30
Resource URI: http://kar.kent.ac.uk/id/eprint/17627 (The current URI for this page, for reference purposes)
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