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).

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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
Date:	January 1998
Number:	No.496
Number of Pages:	25
Status:	Not Peer Reviewed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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URI:	http://wrap.warwick.ac.uk/id/eprint/1661

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