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Germany and the European disease
This paper is concerned with the growth of unemployment in Europe in the late 70s and early 80s. Unemployment has risen to double digit rates in many countries, rates which are not considered likely to fall much in the rest of the 80s. A theory--'the disease'--is expounded, with empirical evidence from the Federal Republic of Germany. The disease is characterized by high unemployment and low output growth, these being systematic rather than the consequence of some temporary phenomenon such as the downphase of the business cycle. Consequently we present a 'natural rate' explanation as an ...