| Author: | Carruth, A. Hooker, M. Oswald, A. |
| Title: | Unemployment equilibria and input prices: theory and evidence from the United States |
| Journal: | Review of Economics and Statistics
1998 : NOV, VOL. 80:4, p. 621-628 |
| Index terms: | ECONOMICS STATISTICS USA |
| Language: | eng |
| Abstract: | The paper develops an efficiency-wage model in which input prices affect the equilibrium rate of unemployment. The authors 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 US 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. |
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