Conference Paper

Hysteresis in unemployment

Abstract: Hysteresis is central to long-run unemployment movements in many countries. This essay addresses two broad issues. The first is whether there is clear evidence of hysteresis effects. To put it differently, can we reject the hypothesis that the NAIRU, and hence the long run behavior of unemployment, is independent of aggregate demand? The second broad issue is the nature of hysteresis. Through what mechanisms do short-run unemployment movements influence the NAIRU? What determines the strength of these effects in different countries and time periods? What are the implications for monetary policy?

Keywords: Phillips curve; Inflation (Finance); Unemployment;

Status: Published in Understanding inflation and the implications for monetary policy: a Phillips curve retrospective (2008: June 9-11)

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Bibliographic Information

Provider: Federal Reserve Bank of Boston

Part of Series: Conference Series ; [Proceedings]

Publication Date: 2008

Volume: 53