Production Constraints and the NAIRU

Stephen George Hall () and Ciaran Driver ()

Economics - The Open-Access, Open-Assessment E-Journal, 2008, vol. 2, issue 11, pages 1-15

Abstract: This paper argues that the production constraints in the basic NAIRU model should be distinguished by type: capital constraints and labour constraints. It notes the failure to incorporate this phenomenon in standard macro models. Using panel data for UK manufacturing over 80 quarters we show that capital constraints became relatively more important during the 1980s as industry failed to match the increase in labour flexibility with rising capital investment. --

Keywords: Capital; labour; constraints; NAIRU; panel data; structural breaks (search for similar items in EconPapers)
JEL-codes: C23 D24 E22 E24 (search for similar items in EconPapers)
Date: 2008
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Working Paper: Production Constraints and the NAIRU (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:zbw:ifweej:7260

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