New Evidence on Cyclical and Structural Sources of Unemployment |
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Author:
| Chen, Jinzhu Trehan, Bharat Kannan, Prakash Loungani, Prakash |
Series title: | IMF Working Papers |
ISBN: | 978-1-4552-8960-8 |
Publication Date: | May 2011 |
Publisher: | International Monetary Fund
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Book Format: | Ebook |
List Price: | Contact Supplier contact
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Book Description:
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We provide cross-country evidence on the relative importance of cyclical and structural factors in explaining unemployment, including the sharp rise in U.S. long-term unemployment during the Great Recession of 2007-09. About 75% of the forecast error variance of unemployment is accounted for by cyclical factors-real GDP changes (?Okun's Law?), monetary and fiscal policies, and the uncertainty effects emphasized by Bloom (2009). Structural factors, which we measure using the dispersion...
More DescriptionWe provide cross-country evidence on the relative importance of cyclical and structural factors in explaining unemployment, including the sharp rise in U.S. long-term unemployment during the Great Recession of 2007-09. About 75% of the forecast error variance of unemployment is accounted for by cyclical factors-real GDP changes (?Okun's Law?), monetary and fiscal policies, and the uncertainty effects emphasized by Bloom (2009). Structural factors, which we measure using the dispersion of industry-level stock returns, account for the remaining 25 percent. for U.S. long-term unemployment the split between cyclical and structural factors is closer to 60-40, including during the Great Recession.