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The Natural Unemployment Rate in Australia since the Seventies

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  • NICOLAAS GROENEWOLD
  • A. J. HAGGER

Abstract

The natural rate of unemployment is calculated based on Lilien's(1982) notion that an increase in the sectoral dispersion of demand results in a rise in unemployment for a given level of aggregate demand. In contrast to earlier applications, the dispersion measure is based on sectoral employment growth rates purged of aggregate influences using a VAR model. We find that most of the rise in unemployment in Australia since the 1970s reflects the increase in the underlying natural rate. This finding is broadly consistent with Lilien's results for the US as well as earlier results for Australia and Canada.

Suggested Citation

  • Nicolaas Groenewold & A. J. Hagger, 1998. "The Natural Unemployment Rate in Australia since the Seventies," The Economic Record, The Economic Society of Australia, vol. 74(224), pages 24-35, March.
    • Handle: RePEc:bla:ecorec:v:74:y:1998:i:224:p:24-35
    DOI: 10.1111/j.1475-4932.1998.tb01901.x
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    Cited by:

    1. John McDonald, 1999. "A Most Unnatural Unemployment Rate for Australia," The Economic Record, The Economic Society of Australia, vol. 75(2), pages 167-170, June.
    2. Yanggyu Byun & Hae-shin Hwang, 2015. "Sectoral shifts or aggregate shocks? A new test of sectoral shifts hypothesis," Empirical Economics, Springer, vol. 49(2), pages 481-502, September.
    3. De-Chih Liu, 2011. "Hysteresis Hypothesis in Job Creation and Destruction: Evidence from the U.S," Annals of Economics and Finance, Society for AEF, vol. 12(2), pages 389-409, November.
    4. Marika Karanassou & Hector Sala, 2010. "Labour Market Dynamics in Australia: What Drives Unemployment?," The Economic Record, The Economic Society of Australia, vol. 86(273), pages 185-209, June.
    5. Nicolaas Groenewold & A. J. Hagger & A. J. Hagger, 1999. "A ‘Lilien’ Natural Rate Series for Australia: A Reply," The Economic Record, The Economic Society of Australia, vol. 75(2), pages 173-176, June.
    6. Anh T. Le & Paul W. Miller, 2000. "Australia's Unemployment Problem," The Economic Record, The Economic Society of Australia, vol. 76(232), pages 74-104, March.
    7. Mardi Dungey & John Pitchford, 2000. "The Steady Inflation Rate of Economic Growth," The Economic Record, The Economic Society of Australia, vol. 76(235), pages 386-400, December.
    8. David Shepherd & Robert Dixon, 2002. "The Relationship Between Regional and National Unemployment," Regional Studies, Taylor & Francis Journals, vol. 36(5), pages 469-480.
    9. N. Groenewold & A.J. Hagger, 1998. "The Australian Natural Rate of Unemployment: Some estimates from a structural VAR," Economics Discussion / Working Papers 98-23, The University of Western Australia, Department of Economics.
    10. Robert Dixon & David Shepherd, 2001. "Trends and Cycles in Australian State and Territory Unemployment Rates," The Economic Record, The Economic Society of Australia, vol. 77(238), pages 252-269, September.
    11. Guy Debelle & Philip Lowe, 1999. "The Natural Rate of Unemployment in Australia since the Seventies: A Comment," The Economic Record, The Economic Society of Australia, vol. 75(2), pages 171-172, June.

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