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.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Length: 35 pages Date of creation: 2002 Date of revision: Handle: RePEc:mlb:wpaper:846
Contact details of provider: Postal: Department of Economics, The University of Melbourne, 5th Floor, Economics and Commerce Building, Victoria, 3010, Australia Phone: +61 3 8344 5289 Fax: +61 3 8344 6899 Email: Web page: http://www.economics.unimelb.edu.au More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Colemann Leong).
Find related papers by JEL classification: E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles