Production Constraints and the NAIRU

Ciaran Driver and Stephen Hall

No 2007-41, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This paper argues that the production constraints in the basic NAIRU model should be distinguished by type: capital constraints and labour constraints. It notes the failure to incorporate this phenomenon in standard macro models. Using panel data for UK manufacturing over eighty quarters it is shown that capital constraints became relatively more important during the 1980s as industry failed to match the increase in labour flexibility with rising capital investment.

Keywords: capital labour constraints nairu panel; data structural; breaks (search for similar items in EconPapers)
JEL-codes: C23 D24 E22 E24 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-mac
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https://www.econstor.eu/bitstream/10419/17964/1/dp2007-41.pdf (application/pdf)

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Journal Article: Production Constraints and the NAIRU (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:6168

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