Is hysteresis important for U.S. unemployment?

Norman J. Morin and John Roberts
Additional contact information
Norman J. Morin: https://www.federalreserve.gov/econres/norman-j-morin.htm

No 1999-56, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We look for evidence of \"hysteresis\" in the U.S. unemployment rate - that is, that current labor market outcomes affect the future equilibrium level of the unemployment rate. We first examine (using a variety of econometric tests for unit roots) whether the unemployment rate tends to come back to a long-run average over time. On balance, our results suggest that the unemployment rate tends to return to a long-run value, ruling out the possibility of permanent hysteresis. We look for evidence of temporary hysteresis by examining whether lagged unemployment enters a standard Phillips-curve model of U.S. inflation. We find week evidence in support of temporary hysteresis, but the effect is not large, suggesting that hysteresis is not very important for U.S. unemployment.

Keywords: Unemployment; Labor market (search for similar items in EconPapers)
Date: 1999
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.federalreserve.gov/pubs/feds/1999/199956/199956abs.html (text/html)
http://www.federalreserve.gov/pubs/feds/1999/199956/199956pap.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:1999-56

Access Statistics for this paper

More papers in Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().