DP10745 Hysteresis and the European Unemployment Problem Revisited
|Publication Date:||August 2015|
|Keyword(s):||insider-outsider models, New Keynesian model, unemployment fluctuations, wage Phillips curve|
|JEL(s):||E24, E31, E32|
|Programme Areas:||Labour Economics, International Macroeconomics and Finance, Monetary Economics and Fluctuations, Macroeconomics and Growth|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=10745|
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.