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Author:Tasci, Murat 

Working Paper
Lessons for forecasting unemployment in the United States: use flow rates, mind the trend
This paper evaluates the ability of autoregressive models, professional forecasters, and models that incorporate unemployment flows to forecast the unemployment rate. We pay particular attention to flows-based approaches?the more reduced-form approach of Barnichon and Nekarda (2012) and the more structural method in Tasci (2012)?to generalize whether data on unemployment flows are useful in forecasting the unemployment rate. We find that any approach that considers unemployment inflow and outflow rates performs well in the near term. Over longer forecast horizons, Tasci (2012) appears to be a useful framework even though it was designed to be mainly a tool to uncover long-run labor market dynamics such as the "natural" rate. Its usefulness is amplified at specific points in the business cycle when the unemployment rate is away from the longer-run natural rate. Judgmental forecasts from professional economists tend to be the single best predictor of future unemployment rates. However, combining those guesses with flows-based approaches yields significant gains in forecasting accuracy.
AUTHORS: Meyer, Brent; Tasci, Murat
DATE: 2015-02-01

Journal Article
Challenges with Estimating U Star in Real Time
Although the concept of the natural rate of employment, NAIRU, or ?U star? is used to measure the amount of slack in the labor market, it is an unobservable quantity that must be estimated using data currently available. This Commentary investigates the degree to which our estimates of U star at various points in the current business cycle have changed as real-time data have been revised and as more data points have accumulated. I find that the availability of additional data has contributed to a significant change in our estimates of U star at earlier points in the business cycle, a result that suggests we might have been underestimating the level of labor market slack during some of the recent recovery period. In retrospect, our updated estimates of U star suggest labor markets were not as tight as we thought they were then.
AUTHORS: Tasci, Murat
DATE: 2019-11

Journal Article
The State of States’ Unemployment in the Fourth District
Unemployment rates vary across individual US states at any point in time and respond to business-cycle fluctuations differently. Evaluating what constitutes a ?normal? level for the unemployment rate at the state level is not easy, but it is an important issue for policymakers. We introduce a framework that enables us to calculate the normal unemployment rate for each of the four states in the Fourth District and compare that rate to the national normal rate. We conclude that these states and the District as a whole have very little labor market slack left from the Great Recession.
AUTHORS: Tasci, Murat; Treanor, Caitlin; Vecchio, Christopher
DATE: 2017-01

Journal Article
Labor market rigidity, unemployment, and the Great Recession
Countries with very flexible institutions and labor market policies, like the U.S., experienced substantial increases in unemployment over the course of the Great Recession, while countries with relatively rigid institutions and strict labor market policies, like France, fared better. However, this better short-term performance comes with a tradeoff; evidence suggests that flexible labor markets keep unemployment lower in the long run.
AUTHORS: Tasci, Murat; Zenker, Mary
DATE: 2011-06

Journal Article
Coordination failures in the labor market
Can two countries, or two different states, with similar technologies, resources, and policies exhibit differences in labor market performance? In contrast to a commonly held view, the answer is yes under some conditions that we review in this Commentary. If these conditions are satisfied, the unemployment rate and the production of an economy can fluctuate even in the absence of shocks. Moreover, government intervention can be useful provided that it coordinates the economy on the preferred outcome.
AUTHORS: Rocheteau, Guillaume; Tasci, Murat
DATE: 2007-11

Journal Article
The minimum wage and the labor market
New models of employment show that there are some cases in which a minimum wage can have positive effects on employment and social welfare. The effects depend ultimately on the prevailing market wage and the frictions in the market. Evidence to date does not support the view that raising the minimum wage will lead to positive employment effects.
AUTHORS: Rocheteau, Guillaume; Tasci, Murat
DATE: 2007-05

Journal Article
Unemployment after the recession: a new natural rate?
The past recession has hit the labor market especially hard, and economists are wondering whether some fundamentals of the market have changed because of that blow. Many are suggesting that the natural rate of long-term unemployment?the level of unemployment an economy can?t go below?has shifted permanently higher. We use a new measure that is based on the rates at which workers are finding and losing jobs and which provides a more accurate assessment of the natural rate. We find that the natural rate of unemployment has indeed shifted higher?but much less so than has been suggested. Surprising trends in both the job-finding and job-separation rates explain much about the current state of the unemployment rate.
AUTHORS: Zaman, Saeed; Tasci, Murat
DATE: 2010-09

Journal Article
An unstable Okun’s Law, not the best rule of thumb
Okun?s law is a statistical relationship between unemployment and GDP that is widely used as a rule of thumb for assessing the unemployment rate?why it might be at a certain level or where it might be headed, for example. Unfortunately, the Okun?s law relationship is not stable over time, which makes it potentially misleading as a rule of thumb.
AUTHORS: Meyer, Brent; Tasci, Murat
DATE: 2012-06

Journal Article
How Much Slack Is in the Labor Market? That Depends on What You Mean by Slack
Estimates of labor market slack can diverge a great deal depending on how slack is defined. We calculate slack using five different concepts that all focus on a single labor market indicator, the unemployment rate. We show that the estimates all provide useful?but different?information. We argue that choosing the best measure of slack depends on the question being asked. If the question is, ?Has the unemployment rate reached its longer-run normal level?? then our answer is, ?Almost.? But significant uncertainty surrounds the estimates; and others may wish to consider additional labor market indicators.
AUTHORS: Tasci, Murat; Verbrugge, Randal
DATE: 2014-10

Journal Article
What constitutes substantial employment gains in today’s labor market?
The Federal Open Market Committee (FOMC) has tied its asset purchases to a ?substantial improvement? in labor market conditions. While we don?t speculate on what the FOMC means by substantial improvement, we do explore the level of monthly job gains that would gradually deliver the underlying trend unemployment rate within a reasonable timeframe, under several plausible scenarios. We find that the path of monthly job gains, which is highly dependent on a few key parameters, is likely to be smaller than the path associated with previous recoveries.
AUTHORS: Tasci, Murat; Schweitzer, Mark E.
DATE: 2013-06


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