Hysteresis in unemployment

Laurence Ball

Conference Series ; [Proceedings], 2008

Abstract: Hysteresis is central to long-run unemployment movements in many countries. This essay addresses two broad issues. The first is whether there is clear evidence of hysteresis effects. To put it differently, can we reject the hypothesis that the NAIRU, and hence the long run behavior of unemployment, is independent of aggregate demand? The second broad issue is the nature of hysteresis. Through what mechanisms do short-run unemployment movements influence the NAIRU? What determines the strength of these effects in different countries and time periods? What are the implications for monetary policy?

Keywords: Phillips curve; Inflation (Finance); Unemployment (search for similar items in EconPapers)
Date: 2008
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