Hysteresis In Unemployment And Jobless Recoveries

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Hysteresis In Unemployment And Jobless Recoveries

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Author : Dmitry Plotnikov
language : en
Publisher: International Monetary Fund
Release Date : 2014-05-06

Hysteresis In Unemployment And Jobless Recoveries written by Dmitry Plotnikov and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-05-06 with Business & Economics categories.

This paper develops and estimates a general equilibrium rational expectations model with search and multiple equilibria where aggregate shocks have a permanent effect on the unemployment rate. If agents' wealth decreases, the unemployment rate increases for a potentially indefinite period. This makes unemployment rate dynamics path dependent as in Blanchard and Summers (1987). I argue that this feature explains the persistence of the unemployment rate in the U.S. after the Great Recession and over the entire postwar period.

Hysteresis Via Endogenous Rigidity In Wages And Participation

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Author : Cynthia L. Doniger
language : en
Publisher:
Release Date : 2018

Hysteresis Via Endogenous Rigidity In Wages And Participation written by Cynthia L. Doniger and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with Hysteresis (Economics) categories.

We document that the past three "jobless" recoveries also featured asymmetries in labor force participation and labor compensation, with each falling to new lows during each cycle. We model these asymmetries as resulting from a strategic complementarity in firms' wage setting and workers' job search strategies. Strategic complementarity results in a continuum of possible equilibria with higher-wage equilibria welfare dominating lower-wage equilibria. Assuming that no economic agent deviates from an existing strategy unless deviation is a unilateral best response, the model exhibits (1) periods of endogenous rigidity in wages and participation, (2) persistent changes in wages, participation, and output in response to transitory movements in labor productivity, (3) sluggish recoveries including both a "jobless" phase, in which productivity recovers while unemployment remains elevated, and a "wageless" phase, in which employment recovers but wages remain depressed. Calibrating the model suggests that the U.S. unemployment rate may need to fall to as low as 2.8 percent before labor compensation recovers to pre-Financial Crisis levels.

Hysteresis Via Endogenous Rigidity In Wages And Participation

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Author : Cynthia Doniger
language : en
Publisher:
Release Date : 2020

Hysteresis Via Endogenous Rigidity In Wages And Participation written by Cynthia Doniger and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with categories.

We document that the past three ?jobless? recoveries also featured asymmetries in labor force participation and labor compensation, with each falling to new lows during each cycle. We model these asymmetries as resulting from a strategic complementarity in firms' wage setting and workers' job search strategies. Strategic complementarity results in a continuum of possible equilibria with higher-wage equilibria welfare dominating lower-wage equilibria. Assuming that no economic agent deviates from an existing strategy unless deviation is a unilateral best response, the model exhibits (1) periods of endogenous rigidity in wages and participation, (2) persistent changes in wages, participation, and output in response to transitory movements in labor productivity, (3) sluggish recoveries including both a ?jobless " phase, in which productivity recovers while unemployment remains elevated, and a ?wageless " phase, in which employment recovers but wages remain depressed Calibrating the model suggests that the U.S. unemployment rate may need to fall to around 3 percent before labor compensation recovers to pre-Financial Crisis levels.

Slow Recoveries And Unemployment Traps

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Author : Sushant Acharya
language : en
Publisher:
Release Date : 2018

Slow Recoveries And Unemployment Traps written by Sushant Acharya and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with Hysteresis (Economics) categories.

We analyze monetary policy in a model where temporary shocks can permanently scar the economy's productive capacity. Unemployed workers' skill losses generate multiple steady-state unemployment rates. When monetary policy is constrained by the zero bound, large shocks reduce hiring to a point where the economy recovers slowly at best -- at worst, it falls into a permanent unemployment trap. Since monetary policy is powerless to escape such traps ex-post, it must avoid them ex-ante. The model quantitatively accounts for the slow U.S. recovery following the Great Recession, and suggests that lack of swift monetary accommodation helps explain the European periphery's stagnation.

Unemployment And Economic Recovery

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Author : Linda Levine
language : en
Publisher: DIANE Publishing
Release Date : 2010-11

Unemployment And Economic Recovery written by Linda Levine and has been published by DIANE Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-11 with Business & Economics categories.

Although the economy has begun growing again, it may be a while before the unemployment rate shows steady improvement. The unemployment rate is considered a lagging indicator, meaning that its ups and downs happen some time after the ups and downs of other indicators of economic activity. For example, more than a year elapsed before the unemployment rate trended downward following the end of the 1990-1991 and 2001 recessions. This led the two to be labeled jobless recoveries. By contrast, after four earlier recessions the unemployment rate began a sustained decline within four to five months. This report examines the relationship between economic growth and the unemployment rate to anticipate possible future developments.

Hysteresis And Business Cycles

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Author : Ms.Valerie Cerra
language : en
Publisher: International Monetary Fund
Release Date : 2020-05-29

Hysteresis And Business Cycles written by Ms.Valerie Cerra and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-05-29 with Business & Economics categories.

Traditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as “hysteresis,” argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and theoretical literature that motivate this paradigm shift. The renewed interest in hysteresis has been sparked by the persistence of the Global Financial Crisis and fears of a slow recovery from the Covid-19 crisis. The findings of the recent literature have far-reaching conceptual and policy implications. In recessions, monetary and fiscal policies need to be more active to avoid the permanent scars of a downturn. And in good times, running a high-pressure economy could have permanent positive effects.

Unemployment Hysteresis And The Natural Rate Hypothesis

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Author : Rod Cross
language : en
Publisher:
Release Date : 1988

Unemployment Hysteresis And The Natural Rate Hypothesis written by Rod Cross and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1988 with Employment (Economic theory) categories.

Aimed at economists and students of macroeconomics and labour economics, this collection of essays covers topics ranging from hysteresis and the natural rate to characteristics of the unemployed.

Helping Larry Summers Connect The U S Jobless Recovery Dots To Global Financial Integration

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Author : Laurie Thomas Vass
language : en
Publisher:
Release Date : 2009

Helping Larry Summers Connect The U S Jobless Recovery Dots To Global Financial Integration written by Laurie Thomas Vass and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with categories.

Our interest in writing this article is to create a bridge between the scholarly and academic research on technological innovation and a private sector, for-profit business model that implements the ideas on small business innovation and entrepreneurship, primarily in metro regional economies. Larry Summers made his initial economic splash as an academic back in the late 1970s with his analysis on the causes of unemployment in the moribund European economies. (Hysteresis and the European Unemployment Problem, 1986). Recently, he has been expressing uncertainty about the cause of the jobless economic recovery. Summers had written that unemployment in Europe could be explained as an outcome of improved productivity that occurred without causing job creation. The productivity improvements occurred during a time of great economic upheaval in Europe, which Summers called “hysteresis,” meaning a sharp break with historical conditions. Summers' discomfort about understanding the current jobless recovery can be eased considerably if he would simply apply his theory of hysteresis to the consolidation that has occurred in the global financial and capital markets. Jobless economic growth in the U.S. is the outcome when the Fed becomes banker-for-the-world.

Some Evidence On Hysteresis In Unemployment Rates

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Author : Albert Jaeger
language : en
Publisher:
Release Date : 1991

Some Evidence On Hysteresis In Unemployment Rates written by Albert Jaeger and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1991 with Employment (Economic theory) categories.

The Rebirth Of The Greek Labor Market

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Author : P. Petrakis
language : en
Publisher: Springer
Release Date : 2014-12-16

The Rebirth Of The Greek Labor Market written by P. Petrakis and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-12-16 with Business & Economics categories.

The Rebirth of the Greek Labor Market provides evidence of the macroeconomic evolution of the Greek economy, as well as current conditions in the labor market, to suggest potential areas of growth following the crisis. The contributors of this collection focus on three main issues that make the overall volume distinctive. Firstly, the authors develop a macro-econometric model for the Greek economy, which is flexible in terms of policy analysis and provides reasonable forecasts for the period between 2014-2020, under three scenarios. Secondly, the authors analyze the dynamism in the Greek economy, as well as the problematic Greek labor market. Lastly, using the estimations provided by the macro-econometric model developed, an input-output analysis is conducted - for every one of the three scenarios - in order to investigate and quantify the impact of the economic crisis, not only to the total employment but also in the number of employees by occupation, for all productive sectors of the economy. Using this structure, this indispensable new volume identifies the occupations, professions, and sectors with the greatest losses, as well as those showing a positive momentum, up to 2020.