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In search of the natural rate of unemployment

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  • King, Thomas B.
  • Morley, James

Abstract

The natural rate of unemployment can be measured as the time-varying steady state of a structural vector autoregression. For post-War U.S. data, the natural rate implied by this approach is more volatile than most previous estimates, with its movements accounting for the bulk of the variation in the unemployment rate, as well as substantial portions of the variation in aggregate output and inflation. These movements, in turn, can be related to variables associated with labor-market search theory, including unemployment benefits, labor productivity, real wages, and sectoral shifts in the labor market. There is also a strong negative relationship between inflation and the corresponding measure of cyclical unemployment, supporting the existence of a short-run Phillips Curve.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 54 (2007)
Issue (Month): 2 (March)
Pages: 550-564

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Handle: RePEc:eee:moneco:v:54:y:2007:i:2:p:550-564

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Web page: http://www.elsevier.com/locate/inca/505566

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References

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Citations

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Cited by:
  1. Klaus Schmidt-Hebbel & Carl E. Walsh, 2009. "Monetary Policy And Key Unobservables: Evidence From Large Industrial And Selected Inflation-Targeting Countries," Working Papers Central Bank of Chile 527, Central Bank of Chile.
  2. Hiroaki Miyamoto & Yuya Takahashi, 2008. "Productivity Growth, On-the-Job Search, and Unemployment," Working Papers EMS_2011_06, Research Institute, International University of Japan, revised Feb 2011.
  3. Eva Köberl & Sarah M. Lein, 2008. "The NAICU and the Phillips curve – An Approach Based on Micro Data," KOF Working papers 08-211, KOF Swiss Economic Institute, ETH Zurich.
  4. Juan José Echavarría & Enrique López & Sergio Ocampo & Norberto Rodríguez, 2011. "Choques, instituciones laborales y desempleo en Colombia," BORRADORES DE ECONOMIA 009154, BANCO DE LA REPÚBLICA.
  5. Jorge E. Restrepo, 2006. "Estimaciones de NAIRU para Chile," Working Papers Central Bank of Chile 361, Central Bank of Chile.
  6. Sergio Ocampo & Norberto Rodríguez, 2011. "An Introductory Review of a Structural VAR-X Estimation and Applications," Borradores de Economia 686, Banco de la Republica de Colombia.
  7. Richard A. Ashley & Randall J. Verbrugge., 2006. "Mis-Specification in Phillips Curve Regressions: Quantifying Frequency Dependence in This Relationship While Allowing for Feedback," Working Papers e06-11, Virginia Polytechnic Institute and State University, Department of Economics.
  8. Richard A. Ashley. & Randall J. Verbrugge., 2006. "Mis-Specification and Frequency Dependence in a New Keynesian Phillips Curve," Working Papers e06-12, Virginia Polytechnic Institute and State University, Department of Economics.
  9. Hian Teck Hoon & Kong Weng Ho, 2007. "Distance to Frontier and the Big Swings of the Unemployment Rate: What Room is Left for Monetary Policy?," Kiel Working Papers 1347, Kiel Institute for the World Economy.
  10. Klinger, Sabine & Weber, Enzo, 2012. "Decomposing Beveridge curve dynamics by correlated unobserved components," IAB Discussion Paper 201228, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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