Discussion Paper Details

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Title: Hysteresis and the European Unemployment Problem Revisited

Author(s): Jordi Galí

Publication Date: August 2015

Keyword(s): insider-outsider models, New Keynesian model, unemployment fluctuations and wage Phillips curve

Programme Area(s): International Macroeconomics and Finance, Labour Economics, Macroeconomics and Growth and Monetary Economics and Fluctuations

Abstract: The unemployment rate in the euro area appears to contain a signi?ficant nonstationary component, suggesting that some shocks have permanent e¤ects on that variable. I explore possible sources of this nonstationarity through the lens of a New Keynesian model with unemployment, and assess their empirical relevance.

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Bibliographic Reference

Galí, J. 2015. 'Hysteresis and the European Unemployment Problem Revisited'. London, Centre for Economic Policy Research.