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Natural rate of unemployment (monetarism)
New definition of Unemployment Rate | Supernatural Rate = Actual Rate – Natural rate
The Natural Rate Hypothesis has been around us for … since Freidman presidential adress (1968?). Economists know that the definition lies on shaky grounds.
Mismatch shocks and the natural rate of unemployment
The authors estimate a DSGE model that features nominal rigidities and search frictions in the labor market. They evaluate the importance of mismatch shocks in accounting for the recent behavior of the Beveridge curve. Their fndings suggest that the rise in the unemployment rate during the Great Recession is mainly due to cyclical factors rather than to an increase in … Continue reading
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