Unemployment and Capital Accumulation in Interwar Britain
AbstractThe paper uses the Kalman filter method to estimate the time-varying NAIRU of interwar Britain and shows that, during the 1930s, the NAIRU drifted upwards by approximately four per cent. Also, the paper presents an imperfect competition model which predicts that, in the medium run, the NAIRU depends on labour market institutions, unanticipated total factor productivity growth and capital accumulation. Econometric evidence based on data from interwar Britain does not contradict this hypothesis. In particular, it supports the hypothesis that the rising trend of the NAIRU during the 1930s is partly due to a slowdown in capital accumulation demonstrating, thus, that adverse demand shocks may have long-lasting effects.
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Bibliographic InfoPaper provided by University of Essex, Department of Economics in its series Economics Discussion Papers with number 565.
Date of creation: 29 Sep 2003
Date of revision:
Postal: Discussion Papers Administrator, Department of Economics, University of Essex, Wivenhoe Park, Colchester CO4 3SQ, U.K.
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-06-22 (All new papers)
- NEP-EEC-2003-10-05 (European Economics)
- NEP-HIS-2003-10-05 (Business, Economic & Financial History)
- NEP-LAB-2004-06-22 (Labour Economics)
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