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

Alan Carruth, M.A. Hooker and Andrew Oswald
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M.A. Hooker: Federal Reserve Board, USA

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: The paper develops an efficiency-wage model, where input prices affect the equilibrium 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 US joblessness. The equations do well in forecasting unemployment many years out-of-sample, and provide evidence that the oil-price spike associated with Iraq's invasion of Kuwait appears to be a component of the "mystery" recession which followed.

Keywords: WAGES; UNEMPLOYMENT (search for similar items in EconPapers)
JEL-codes: E24 E32 (search for similar items in EconPapers)
Date: 1998
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https://warwick.ac.uk/fac/soc/economics/research/w ... 5-1998/twerp_496.pdf

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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 (1997)
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