Unemployment Equilibria And Input Prices: Theory And Evidence From The United States

Alan A. Carruth, Mark A. Hooker and Andrew J. Oswald

The Review of Economics and Statistics, 1998, vol. 80, issue 4, pages 621-628

Abstract: The paper develops an efficiency-wage model in which input prices affect the equilibrium rate of unemployment. We show that a simple framework based on only two prices (the real price of oil and the real rate of interest) is able to explain the main postwar movements in the rate of U.S. joblessness. The equations do well in forecasting unemployment many years out of sample, and provide evidence that the oil-price spike associated with Iraq's invasion of Kuwait appears to be a component of the "mystery" recession that followed. © 2000 by the President and Fellows of Harvard College and the Massachusetts Institute of Technolog

Date: 1998
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Working Paper: Unemployment Equilibria and Input Prices: Theory and Evidence from the United States (1998)
Working Paper: Unemployment Equilibria and Input Prices: Theory and Evidence from the United States (1997)
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