IDEAS home Printed from https://ideas.repec.org/p/mlb/wpaper/846.html
   My bibliography  Save this paper

A Simple Model of Unemployment Rate Dynamics

Author

Listed:
  • Robert Dixon

Abstract

The paper seeks to 'explain' certain stylised facts in relation to flows into and out of Unemployment and especiaIly to identify the 'proximate' determinants of the amplitude and the frequency of fluctuations in the Unemployment Rate over the course of the business cycle. Since the evolution of the Unemployment Rate must be seen as dependent on the relative size of the Inflow and Outflow Rates, a multiple equation model has to be employed. It is found that the transition probability (@) is a determinant of the amplitude, and thus the mean value of, the Unemployment Rate but not the frequency of fluctuations in the Unemployment Rate. However, it is found that the Inflow Rate is a determinant of both the amplitude and the frequency of fluctuations in the Unemployment Rate. We are also able to explain why it is that researchers find that the long-run effect of a change in the Inflow Rate upon the Outflow Rate is to change the Outflow Rate by exactly the same amount as the Inflow Rate has changed.

Suggested Citation

  • Robert Dixon, 2002. "A Simple Model of Unemployment Rate Dynamics," Department of Economics - Working Papers Series 846, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:846
    as

    Download full text from publisher

    File URL: http://www.economics.unimelb.edu.au/downloads/wpapers-02/846.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Worker flows; Unemployment; Business cycle;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mlb:wpaper:846. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dandapani Lokanathan (email available below). General contact details of provider: https://edirc.repec.org/data/demelau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.