The Actual U.S. Unemployment Rate in 2019 Was Twice the Official Rate, and the Phillips Curve

Challenge ◽  
2021 ◽  
pp. 1-24
Author(s):  
John Komlos
Keyword(s):  
Unemployment Rate ◽  
Phillips Curve ◽  
Official Rate

Animal Spirits, Persistent Unemployment, and the Belief Function

2013 ◽  
Author(s):  
Roger E. A. Farmer
Keyword(s):  
Unemployment Rate ◽  
Phillips Curve ◽  
Belief Function ◽  
New Keynesian ◽  
Monetary Model ◽  
Posterior Odds ◽  
John Maynard Keynes ◽  
Animal Spirits ◽  
Keynesian Model ◽  
Fiscal And Monetary Policy

This chapter examines the persistence of unemployment by drawing from John Maynard Keynes' two central ideas. The first idea is that any unemployment rate can persist as an equilibrium. The second is that the unemployment rate that prevails is determined by animal spirits. The chapter introduces a three-equation monetary model termed “Farmer monetary model,” which replaces the New Keynesian Phillips curve with a belief function that describes how agents form expectations of future nominal income. The chapter builds and estimates the Farmer monetary model using U.S. data for the period from the first quarter of 1952 to the fourth quarter of 2007. It compares the Farmer monetary model to a New Keynesian model by computing the posterior odds ratio. It shows that the posterior odds favor the Farmer monetary model and concludes by discussing the implications of this finding for fiscal and monetary policy.

scholarly journals THE PHILLIPS CURVE IN PORTUGAL

2013 ◽  
Vol 31 (60) ◽  
Author(s):  
Agostinho Silvestre Rosa
Keyword(s):  
Unemployment Rate ◽  
Productivity Growth ◽  
Inflation Rate ◽  
Phillips Curve ◽  
Labour Productivity ◽  
Annual Data ◽  
Short Term ◽  
Labour Productivity Growth ◽  
Average Labour Productivity ◽  
Wage Inflation

This paper estimates the Phillips curve in Portugal using the Johansen Method, with the wage inflation rate as a dependent variable, based on annual data from the period 1954-1995. The main conclusions are as follows. Firstly, in the long term, the wage inflation rate relates positively to the inflation rate and negatively to the unemployment rate, as expected. There is also a positive relationship between the wage inflation rate and the average labour productivity growth index. Secondly, in the short term, the variation of the wage inflation rate relates negatively and significantly to the error correction mechanism with a negative unitary coefficient; therefore, there is a quick and significant response to the equilibrium error between the wage inflation rate and its determinants. Besides this adjustment, the wage inflation rate responds positively to a lagged wage inflation rate. The variation in the unemployment rate and the average labour productivity growth present the expected signal, negative and positive respectively, but without significance in the short term. The dummy that refers to the April 1974 revolution is significant.

The U.S. Unemployment Rate

2020 ◽  
pp. 137-150
Author(s):  
Frank Stricker
Keyword(s):  
Unemployment Rate ◽  
Government Policy ◽  
Full Employment ◽  
Census Bureau ◽  
Works Progress Administration ◽  
Government Officials ◽  
Discouraged Workers ◽  
Official Rate ◽  
Bureau Of Labor Statistics ◽  
The U.S

Creating a scientific survey of unemployment in the 1930s and 1940s was an advance for people’s understanding of unemployment and for rational government policy. Many government officials, including Secretary of Labor Frances Perkins and agencies including the Census Bureau, the Works Progress Administration, and the Bureau of Labor Statistics (BLS), deserve credit for the achievement. However, today’s BLS unemployment rate omits too many people, and the low count weakens support for job-creation programs. This chapter offers a short history and a critique. It explains and evaluates the official rate, discusses hidden unemployment, including discouraged workers and other labor-force dropouts, evaluates alternative unemployment rates, including the BLS’s U-6 and the National Jobs for All Coalition’s rate, and examines the idea of full employment.

Is there a Core of Macroeconomics that Euro Area Forecasters Believe In?

2012 ◽  
Vol 13 (1) ◽  
pp. 103-115 ◽  
Author(s):  
Christian Pierdzioch ◽  
Georg Stadtmann ◽  
Jan-Christoph Rülke
Keyword(s):  
Growth Rate ◽  
Unemployment Rate ◽  
Euro Area ◽  
Inflation Rate ◽  
Phillips Curve ◽  
Practical Relevance ◽  
Okun’S Law ◽  
Macroeconomic Theory ◽  
Quantity Theory ◽  
Okun's Law

Abstract The quantity theory of money, Okun’s law, and the Phillips curve are cornerstones of macroeconomic theory. But are they also of practical relevance? Using survey data for the euro area, we found that professional economists’ forecasts are consistent with a version of the quantity theory in which forecasts of the growth rate of money supply correlate in a proportional way with forecasts of the inflation rate. We also found that forecasts of changes in the unemployment rate and forecasts of the growth rate of real output are consistent with Okun’s law. Evidence of a systematic link between forecasts of the inflation rate and forecasts of the unemployment rate, however, is not strong.

scholarly journals The Business Cycle, Inflation, and Unemployment Rate Nexus: An Empirical Approach

2021 ◽  
Vol 13 (10) ◽  
pp. 110
Author(s):  
Tito Belchior Silva Moreira ◽  
Michel Constantino ◽  
George Henrique de Moura Cunha ◽  
Paulo Roberto Pires de Sousa ◽  
Luciano Balbino dos Santos
Keyword(s):  
Monetary Policy ◽  
Business Cycle ◽  
Unemployment Rate ◽  
Inflation Rate ◽  
Phillips Curve ◽  
Trade Off ◽  
Causality Tests ◽  
Granger Causality Tests ◽  
The Business Cycle ◽  
American Economy

This paper revisits the main assumption regarding the original Phillips curve regarding the American economy, in which one assumes that the unemployment rate causes an inflation rate. In this context, this paper aims to evaluate if the variance of the inflation rate affects the unemployment rate and, besides, if there is a one-way causality from the variance of the inflation rate to the unemployment rate. Based on quarterly time series from 1959:04 to 2019:04 the empirical results show, via OLS and GMM methods, that the monetary policy affects the business cycle, and, in turn, the business cycle impacts the unemployment rate. Hence, the monetary policy affects indirectly the unemployment rate via the business cycle. On the other hand, the variance of the inflation rate contributes to an increase in the unemployment rate, consequently, there isn’t a trade-off between the unemployment rate and the variance of the inflation rate. Moreover, there is a one-way causality from the variance of the inflation rate to the unemployment rate. This is the contribution of this paper. At last, based on the Phillips curve, one expects that the unemployment rate causes the inflation rate. However, the Granger causality tests display a two-way causality relation between both variables.

scholarly journals Financial Development on Employment Rate in Nigeria

2021 ◽  
Vol 12 (1) ◽  
pp. 267
Author(s):  
Victor Ndubuaku ◽  
Victor Inim ◽  
Udo Emmanuel Samuel ◽  
Idamoyibo Hwerien Rosemary ◽  
Abner Ishaku Prince
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Unemployment Rate ◽  
Phillips Curve ◽  
Time Series Data ◽  
Negative Relationship ◽  
Policy Framework ◽  
Series Data ◽  
Employment Rate ◽  
The Sustainable Development

This study examines financial development on employment rate in Nigeria on the premise of goal 8 of the sustainable development goals (SDGs). Using the ARDL model and annualized time-series data from 1999-2019. Findings revealed a positive and statistically significant impact of financial development on employment rate. Supporting the Phillips curve of an inverse nexus between inflation rate and unemployment rate. The findings contravene Okun’s law of a negative relationship between economic growth and unemployment rate. The study recommences a policy framework to influence the operational and business activities of financial institutions to stir employment generation and economic growth in Nigeria.

scholarly journals Microeconomic Foundation for Phillips Curve with a Three-Period Overlapping Generations Model and Negative Real Balance Effect

2021 ◽  
Vol 8 (55) ◽  
pp. 163-175
Author(s):  
Yasuhito Tanaka
Keyword(s):  
Unemployment Rate ◽  
Overlapping Generations ◽  
Inflation Rate ◽  
Phillips Curve ◽  
Monopolistic Competition ◽  
Nominal Wage ◽  
Olg Model ◽  
Real Balance ◽  
Negative Relation ◽  
Profit Maximisation

Abstract We show a negative relation between the inflation rate and the unemployment rate, that is, the Phillips curve using a three-period overlapping generations (OLG) model with childhood period and pay-as-you-go pension for older generation under monopolistic competition with negative real balance effect. In a three-period OLG model, there may exist a negative real balance effect because consumers have debts and savings. A fall (or rise) in the nominal wage rate induces a fall (or rise) in the price, then by negative real balance effect, the unemployment rate rises (or falls), and we get a negative relation between the inflation rate and the unemployment rate. This conclusion is based on the premise of utility maximisation of consumers and profit maximisation of firms. Therefore, we present a microeconomic foundation for the Phillips curve. We also examine the effects of fiscal policy financed by seigniorage, which is represented by left-ward shift of the Phillips curve.

scholarly journals The lack of wage growth and the falling NAIRU

2018 ◽  
Vol 245 ◽  
pp. R40-R55 ◽  
Author(s):  
David N.F. Bell ◽  
David G. Blanchflower
Keyword(s):  
Labour Market ◽  
Unemployment Rate ◽  
Great Recession ◽  
Phillips Curve ◽  
Wage Growth ◽  
Considerable Part ◽  
The Great Recession ◽  
The Uk ◽  
Wage Equations

In this note, we argue that a considerable part of the explanation for the benign wage growth in the advanced world is the rise in underemployment. In the years after 2008 the unemployment rate understates labour market slack. Underemployment is more important than unemployment in explaining the weakness of wage growth in the UK. The Phillips curve in the UK has now to be rewritten into wage underemployment space. Underemployment now enters wage equations while the unemployment rate does not. There is every reason to believe that the NAIRU has fallen sharply since the Great Recession. In our view the NAIRU in the UK may well be nearer to 3 per cent, and even below it, than around 5 per cent, which other commentators including the MPC and the OBR believe.

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