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Unemployment equilibria and input prices: theory and evidence from the United States

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Carruth, Alan A. , Hooker, Mark A. and Oswald, Andrew J. (1998) Unemployment equilibria and input prices: theory and evidence from the United States. Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (No.496).

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Abstract

This 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 U.S. 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.

Item Type:

Working or Discussion Paper (Working Paper)

Subjects:

H Social Sciences > HD Industries. Land use. Labor

Divisions:

Faculty of Social Sciences > Economics

Library of Congress Subject Headings (LCSH):

Unemployment -- United States, Unemployment -- Mathematical models, Interest rates -- United States, Petroleum products -- Prices -- United States, United States -- Economic conditions -- 20th century

Series Name:

Warwick economic research papers

Publisher:

University of Warwick, Department of Economics

Place of Publication:

Coventry

Official Date:

January 1998

Dates:

Date	Event
January 1998	Published

Number:

No.496

Number of Pages:

Status:

Not Peer Reviewed

Access rights to Published version:

Open Access

Funder:

Economic and Social Research Council (Great Britain) (ESRC), Leverhulme Trust (LT), London School of Economics and Political Science (LSE)

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