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Evidence and Theory on the Cyclical Asymmetry in Unemployment Rate Fluctuations

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  • David Andolfatto

Abstract

A number of recent empirical studies have identified the presence of a cyclical asymmetry in unemployment rate fluctuations. In particular, during a recession the unemployment rate increases sharply, while during an expansion the unemployment rate declines only gradually. The purpose of this paper is to demonstrate that this cyclical asymmetry can be explained in an empirically plausible manner by the optimal search activities of individuals in the economy.

Suggested Citation

  • David Andolfatto, 1997. "Evidence and Theory on the Cyclical Asymmetry in Unemployment Rate Fluctuations," Canadian Journal of Economics, Canadian Economics Association, vol. 30(3), pages 709-721, August.
  • Handle: RePEc:cje:issued:v:30:y:1997:i:3:p:709-21
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    References listed on IDEAS

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    1. Plesko, George A., 1988. "The Accuracy of Government Forecasts and Budget Projections," National Tax Journal, National Tax Association, vol. 41(4), pages 483-501, December.
    2. Feenberg, Daniel R, et al, 1989. "Testing the Rationality of State Revenue Forecasts," The Review of Economics and Statistics, MIT Press, pages 300-308.
    3. Cassidy, Glenn & Kamlet, Mark S. & Nagin, Daniel S., 1989. "An empirical examination of bias in revenue forecasts by state governments," International Journal of Forecasting, Elsevier, vol. 5(3), pages 321-331.
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    5. Dufour, J.M., 1979. "Rank Tests for Serial Dependence," Cahiers de recherche 7815, Universite de Montreal, Departement de sciences economiques.
    6. Davidson, Russell & MacKinnon, James G, 1998. "Graphical Methods for Investigating the Size and Power of Hypothesis Tests," The Manchester School of Economic & Social Studies, University of Manchester, vol. 66(1), pages 1-26, January.
    7. Gentry, William M., 1989. "Do State Revenue Forecasters Utilize Available Information," National Tax Journal, National Tax Association, vol. 42(4), pages 429-439, December.
    8. Gentry, William M., 1989. "Do State Revenue Forecasters Utilize Available Information," National Tax Journal, National Tax Association, vol. 42(4), pages 429-39, December.
    9. repec:cup:etheor:v:7:y:1991:i:2:p:253-63 is not listed on IDEAS
    10. Campbell, Bryan & Ghysels, Eric, 1995. "Federal Budget Projections: A Nonparametric Assessment of Bias and Efficiency," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 17-31, February.
    11. Gregory Mankiw, N. & Shapiro, Matthew D., 1986. "Do we reject too often? : Small sample properties of tests of rational expectations models," Economics Letters, Elsevier, vol. 20(2), pages 139-145.
    12. Benjamin M. Friedman, 1980. "Survey Evidence on The Rationality of Interest Rate Expectations," NBER Working Papers 0261, National Bureau of Economic Research, Inc.
    13. Mark S. Kamlet & David C. Mowery & Tsai-Tsu Su, 1987. "Whom do you trust? An analysis of executive and congressional economic forecasts," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 6(3), pages 365-384.
    14. Plesko, George A., 1988. "The Accuracy of Government Forecasts and Budget Projections," National Tax Journal, National Tax Association, vol. 41(4), pages 483-501, December.
    15. Friedman, Benjamin M., 1980. "Survey evidence on the `rationality' of interest rate expectations," Journal of Monetary Economics, Elsevier, vol. 6(4), pages 453-465, October.
    16. Campbell, Bryan & Dufour, Jean-Marie, 1991. "Over-rejections in rational expectations models : A non-parametric approach to the Mankiw-Shapiro problem," Economics Letters, Elsevier, vol. 35(3), pages 285-290, March.
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    Cited by:

    1. repec:ebl:ecbull:v:3:y:2002:i:11:p:1-13 is not listed on IDEAS
    2. Bårdsen Gunnar & Hurn Stanley & McHugh Zöe, 2012. "Asymmetric Unemployment Rate Dynamics in Australia," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, pages 1-22.
    3. Domenico Ferraro, 2014. "The Asymmetric Cyclical Behavior of the U.S. Labor Market," 2014 Meeting Papers 1104, Society for Economic Dynamics.

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