State & Territory Beveridge Curvesand the National Equilibrium Unemployment Rate

Robert Dixon, John Freebairn and Emayenesh Seyoum-Tegegn

No 1033, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: Shifts in the ‘national’ equilibrium rate of unemployment relevant for determining national economic policy settings, we contend, are those shifts which are ‘common across states & territories’. One way to identify these is to identify the common shifts in state and territory Beveridge curves in Australia over time. When we do this we recover a national equilibrium unemployment rate series which is similar to, but at the same time different enough from, other measures to make it interesting. In our view it is this, or some other “national” equilibrium rate series, a series which ‘by construction’ will capture national (nation-wide) factors based on common shocks or common trends across states and territories, that should be the basis for policy and not an ‘aggregate series’ which does not do this. We estimate the value of the equilibrium unemployment rate for 2006 to be 3.7%, which may be compared with the actual unemployment rate for that year of 4.8%, indicating that even as recently as 2006 the actual rate was at least 1 percentage point above the equilibrium rate

Keywords: Equilibrium; Unemployment; Rate; Beveridge; curve; Australia (search for similar items in EconPapers)
JEL-codes: E24 J63 J64 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2008
New Economics Papers: this item is included in nep-mac
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