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Unemployment Equilibria and Input Prices: Theory and Evidence from the United States

Alan Carruth, N. Hooker and Andrew Oswald

Working Papers from Centre for Economic Performance & Institute of Economics

Abstract: The paper develops an efficiency-wage model where input prices affect the equlibrium 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 post-war movements in the rate of U.S. joblessnss. The equations do well in forecasting unemployment many out-of-sample, and provide evidence that the oil price spike associated with Iraq's invasion of Kuweit appears to be a component of the "mystery" recession which followed.

Keywords: UNEMPLOYMENT; WAGE (search for similar items in EconPapers)
JEL-codes: E24 D24 (search for similar items in EconPapers)
Date: 1997
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Journal Article: Unemployment Equilibria And Input Prices: Theory And Evidence From The United States (1998) Downloads
Working Paper: Unemployment Equilibria and Input Prices: Theory and Evidence from the United States (1998) Downloads
Working Paper: Unemployment Equilibria and Input Prices: Theory and Evidence from the United States (1998) Downloads
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