Output and Unemployment Dynamics in the United States: 1950-1985
For U.S. data over 1950-85 the stochastic components of GNP growth and the unemployment rate appear to be stationary, and there is substantial feedback between these variables. The unconditional mean rate of unemployment in a joint model thus provides a natural benchmark in discussions of the "business cycle." A bivariate VAR model is used to describe output-unemployment dynamics to estimate the degree of persistence of output innovations, and to decompose output into trend and cycle. The bivariate results are interpreted using a restricted VAR and it is shown that a closely related cyclical measure can be obtained directly from the Okun's Law equation. Copyright 1989 by John Wiley & Sons, Ltd.
Volume (Year): 4 (1989)
Issue (Month): 3 (July-September)
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