growth and unemployment this paper analyses the effects of growth on long run unemployment using a search model of equilibrium unemployment where growth arises explicitly from the introduction of new technologies that require labour reallocation for their implementation the analysis uncovers and compares between two competing effects of growth on unemployment the first is a capitalisation effect whereby an increase in growth raises the capitalised returns from creating jobs and consequently reduces the equilibrium rate of unemployment the second is a creative destruction effect whereby an increase in growth reduces the duration of a job match thereby raising the equilibrium level of unemployment both directly by raising the job separation rate and indirectly by discouraging the creation of job vacancies this paper asks the question of how the rate of economic growth affects unemployment in the long run the main consideration that leads us to think that this is an interesting question has to do with the re allocative aspect of growth in the long run faster economic growth must come from a faster increase in knowledge to the extent that the advancement of knowledge is embodied in industrial innovations it is likely to raise the job destruction rate through automation skill obsolescence and the bankruptcy associated with the process of creative destruction in short increased growth is likely to produce an increased rate of job turnover and the search theories of lucas and prescott 1974 and pissarides 1990 imply that an increased rate of job turnover will result in a higher natural rate of unemployment this conclusion is also consistent with the empirical results of davis and haltiwanger 1990 which show that periods of high unemployment tend to be periods of high job turnover at the establishment level it suggests the possibility of a positive longrun tradeoff between growth and unemployment at least over some range there has been relatively little attention paid to our question in the literature on longrun determinants of unemployment for example the recent empirical examination by layard nickell and jackman 1991 of unemployment rates among oecd countries did not even consider the rate of economic growth as a possible explanatory variable this is consistent with the seminal theoretical work of phelps 1968 which implies that the natural rate of unemployment is independent of the rate of productivity growth the only

the role of energy in productivity growth the objective of this paper is to analyze the role of energy in the growth of productivity the special significance of energy in economic growth was first established in the classic study energy and the american economy 1850 1975 by sam schurr and his associates 1960 at resources for the future for the period from 1920 to 1955 schurr noted that energy intensity of production had fallen while both labor and total factor productivity were rising the simultaneous decline in energy intensity and labor intensity of production ruled out the possibility of explaining the growth of productivity solely on the basis of substitution of less expensive energy for more expensive labor since the quantity of both energy and labor inputs required for a given level of output had been reduced technical change is also a critical explanatory factor an alternative explanation for growth of output with declining energy and labor intensity required an examination of the character of technical change this examination was motivated by the fact that from 1920 to 1955 the utilization of electricity had expanded by a factor of more than ten while consumption of all other forms of energy only doubled the two key features of technical change during this period were that the thermal efficiency of conversion of fuels into electricity increased by a factor of three and that the unusual characteristics of electricity had made it possible to perform tasks in altogether different ways than if the fuels had to be used directly schurr 1983 p 3 schurr 1982 has recently extended the analysis of energy and the american economy through 1981 for the period through 1969 his conclusions are as follows although the inverse relationship between total factor productivity and energy intensity virtually disappeared during the 1953 1969 period it is still noteworthy that high rates of improvement in total factor productivity were essentially not associated with increases in energy intensity 1982 p 6 schurr 1982 has analyzed the experience of the u s economy in the aftermath of the oil embargo of 1973 he points out that energy intensity of production has fallen steadily since 1973 and that the rate of decline accelerated sharply after the second oil price shock in 1979 following the iranian revolution he goes on to point out that

the effects of military spending on economic activity evidence from state procurement spending the authors use state data from the period 1963 94 to estimate the response of employment growth to military procurement spending the state year panel provides greater variation in both variables than aggregate data there are two main findings first military procurement spending does explain a statistically significant degree of the variation in employment growth across states even in the presence of fixed effects for time and state and other controls second the authors find evidence in support of a nonlinear relationship between procurement spending and employment growth in particular large adverse state procurement shocks have proportionately larger effects on state employment growth rates copyright 1997 by ohio state university press

oil price shocks and the macroeconomy this paper examines the impact of oil price shocks and attempts to explain why the rise in oil prices up to 2008 had little impact on the world economy it makes three main arguments first that oil prices have never been as important as is popularly thought second that the most important route through which oil prices affect output is monetary policy when oil prices pass through to core inflation monetary authorities raise interest rates slowing growth based on the second argument the third argument is that high oil prices have not reduced growth in recent years because they no longer pass through to core inflation so the monetary tightening previously seen in response to high oil prices is absent it also argues that oil prices had little impact on the global recession of 20089

energy consumption at business cycle horizons the case of the united states in this paper we propose a simple extension to a keynesian type macro model by augmenting it with energy consumption we show the relationship between energy consumption and output in a macroeconomic setting and ask the question do permanent shocks dominate changes in energy consumption and output at business cycle horizons for the united states to achieve the goal of this paper we undertake a variance decomposition analysis of shocks based on a common trend and common cycle framework within a vector error correction model our main finding is that permanent shocks explain the bulk of the variations in energy consumption and output at business cycle horizons for the united states

the impact of coal price fluctuations on china s economic output abstractdue to the important role of coal in china s macroeconomic growth the price of coal significantly influences its economic output employing a var model a cointegration test and a state space model of time varying variables this article analyses the influence of coal price fluctuations on the volume and structure of china s economic output including both the strength and the time delay of such influence this article further explores the corresponding relationships between coal price fluctuations and variations in the effects of these fluctuations to analyse the asymmetric influence of coal price fluctuations on china s macroeconomy coal price fluctuations exerted significant long term positive effects and short term negative effects on china s output variables with an average delay of 11 months they had positive effects on investment and consumption over the long term and an increasingly negative effect on imports and exports the average delays were 9 months for investment 6 5 months for

consumer demand and equilibrium unemployment in a working model of the customer market incentive wage economy though not conceived as a constant the natural unemployment rate was taken to be invariant to supply shocks until the late seventies and to real demand shocks until now the largely micro theoretic model here is one in a series deriving the natural rate path from general equilibrium in this model the labor market exhibits generalized real wage rigidity resulting from the use of incentive wages to combat shirking and the asset backing shares is the firms customers arising from customer market friction one finding is that increased consumer demand drives up the natural rate by driving real interest rates up

dynamic cyclical comovements of oil prices with industrial production consumer prices unemployment and stock prices abstract this paper examines the empirical relationship between oil prices and several key macroeconomic variables in particular we investigate the cyclical comovements of crude oil prices with output consumer prices unemployment and stock prices the methodology involves the use of the hodrick prescott hodrick r j prescott e c 1980 post war us business cycles an empirical investigation working paper carnegie mellon university and baxter king baxter m king r g 1999 measuring business cycles approximate band pass filters for economic time series review of economics and statistics 81 575 593 filters as well as the recently developed full sample asymmetric christiano fitzgerald christiano l j fitzgerald t j 2003 the band pass filter international economic review 44 435 465 band pass filter contemporaneous and cross correlation estimates are made using the stationary cyclical components of the time series to make inference about the degree to which oil prices move with the cycle besides documenting a number of important cyclical relationships using three different time series filtering methods the results suggest that crude oil prices are procyclical and lag industrial production additionally we find that oil prices lead consumer prices

the economics of worldwide stagflation the last fifteen years have witnessed dramatic changes in economics not only in the manner in which the economics profession views economics but also in the manner in which the general public views economics and economists by the late 1960 s there had emerged more or less a consensus macroeconomic framework that is an agreed upon structure to be used to study economic problems at the aggregate level robert solow stated as quoted in leijonhufvud 1968

information processing and jury decisionmaking abstract we develop a model to explore the information processing function that jury deliberation and its analogues perform the central question we ask is how much better could a jury possibly perform if it optimally used the collective information available to it than if it decides cases by a simple majority vote before any deliberation or information sharing occurs it is shown how the answer depends on a number of considerations including the correlation among jurors observations the jurors assessments of the relative importance of type i and type ii errors compared with society s assessment of those errors and differences in jurors abilities

monetary policy committees and interest rate setting abstract this paper shows that it is preferable for monetary policy to be conducted by a committee instead of a single policy maker if there is uncertainty about potential output we examine three decision procedures an optimal procedure averaging and voting and find that the latter is the appropriate way to reach decisions if policy makers are not equally skilled finally we demonstrate that efficient decision procedures reduce the persistence of shocks

the asymmetric impact of oil prices interest rates and oil price uncertainty on unemployment in the us abstract in this study we investigate the presence of asymmetric interactions between oil prices oil price uncertainty interest rates and unemployment in a cointegration framework utilizing the nonlinear auto regressive distributed lag nardl approach we show the asymmetric responses of unemployment to changes in oil prices oil price uncertainty and interest rates in the long run more specifically the results of our analyses suggest that an increase in oil price results in increased unemployment while there is no significant impact of reduced oil prices on the one hand reduced oil price uncertainty leads to a decrease in unemployment whereas an increase in oil price uncertainty does not have an impact we also observe increased unemployment in response to a decrease in interest rates as the impact of increased interest rates is not significant last but not least we find that option implied oil price volatility as a measure of oil price uncertainty outperforms the conditional volatility of crude oil prices in predicting unemployment this study provides valuable implications for policymakers to design sound economic policies

determinants of long run unemployment this paper investigates the determinants of long run unemployment and growth by extending the endogenous growth model of howitt and aghion 1998 to allow for a more general treatment of the labor market in the spirit of pissarides 1990 we find that i both long run growth and unemployment depend not only on factors that affect long run growth as identified in endogenous growth models with full employment but also on certain labor market parameters ii long run unemployment may rise or fall with growth depending on the model s parameters and iii though government policies that promote growth indirectly through improvement in labor market efficiency always reduce the long run unemployment rate policies that directly encourage investment in research and development may increase the unemployment rate

viewpoint decision making in committees this article reviews recent developments in the theory of committee decision making a committee consists of self interested members who make a public decision by aggregating imperfect information dispersed among them according to a pre specified decision rule we focus on costly information acquisition strategic information aggregation and rules and processes that enhance the quality of the committee decision seeming inefficiencies of the committee decision making process such as over cautiousness voting and delay emerge as partial remedies to these incentive problems cet article passe en revue certains developpements recents dans la theorie de la prise de decision en comite un comite est defini comme un groupe de membres qui ont des interets particuliers et qui prennent une decision publique en agregeant une information imparfaite et dispersee a travers le groupe selon une regle de decision pre etablie les auteurs portent leur attention sur l acquisition couteuse d information l agregation de l information strategique et les regles et procedures qui accroissent la qualite de la decision en comite ce qui apparait comme des inefficacites du processus de prise de decision en comite sur precaution votes delais s avere etre des remedes partiels aux problemes d incitation

the role of energy in real business cycle models abstract this paper modifies hansen s 1985 analysis of a real business cycle mode with indivisible labor by explicitly including energy as a productive input and modelling the relative price of energy as an exogenous random process one goal is to determine the extent to which the introduction of energy price shocks reduces the reliance of the real business cycle model on unobserved technology shocks the other goal following christiano and eichenbaum 1991 is to compare the correlation between real wages and hours predicted by the energy inclusive model to that predicted by hansen s model

oil price shocks and real gdp growth empirical evidence for some oecd countries this study assesses empirically the effects of oil price shocks on the real economic activity of the main industrialized countries multivariate var analysis is carried out using both linear and non linear models the latter category includes three approaches employed in the literature namely the asymmetric scaled and net specifications evidence of a non linear impact of oil prices on real gdp is found in particular oil price increases are found to have an impact on gdp growth of a larger magnitude than that of oil price declines with the latter being statistically insignificant in most cases among oil importing countries oil price increases are found to have a negative impact on economic activity in all cases but japan moreover the effect of oil shocks on gdp growth differs between the two oil exporting countries in the sample with the uk being negatively affected by an oil price increase and norway benefiting from it

environmental regulation by private contest abstract it is widely expected that the recent trend in the us eu and elsewhere towards an increased role for private agents and agencies in the formulation and enforcement of environmental regulation will continue if environmental regulation is to be privatised in this way it is natural to ask how far the activities of environmental groups on whose shoulders much of the responsibility for defending the environment is likely to fall should be subsidised or taxed in this paper we identify the trade offs involved and characterise the optimal subsidy tax the analysis is argued to have significant implications for how governments should think about the way in which fiscal law treats environmental ngo s

the optimal decision rule for fixed size committees in dichotomous choice situations the general result this paper presents a general pairwise choice framework and derives the optimal decision rule for fixed size committees the main result generalizes a number of earlier results in the subject copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

unemployment equilibria and input prices theory and evidence from the united states the paper develops an efficiency wage model where input prices affect the equlibrium rate of unemployment we show that a simple framework based on only two prices the real price of oil and the real rate of interest is able to explain the main post war movements in the rate of u s joblessnss the equations do well in forecasting unemployment many out of sample and provide evidence that the oil price spike associated with iraq s invasion of kuweit appears to be a component of the mystery recession which followed

forecast encompassing tests and probability forecasts we consider tests of forecast encompassing for probability forecasts for both quadratic and logarithmic scoring rules we propose test statistics for the null of forecast encompassing present the limiting distributions of the test statistics and investigate the impact of estimating the forecasting models parameters on these distributions the small sample performance is investigated in terms of small numbers of forecasts and model estimation sample sizes we show the usefulness of the tests for the evaluation of recession probability forecasts from logit models with different leading indicators as explanatory variables and for evaluating survey based probability forecasts copyright c 2010 john wiley sons ltd

using game theory to analyze electric transmission pricing policies in the united states abstract us public policy towards the private electric power industry is moving away from restrictive regulation and towards promotion of competition alternative policies concerning access to and pricing of transmission are now being discussed similar issues may arise in europe as trade barriers fall our purpose is to show how game theory can help illuminate that debate and identify desirable policies game theory models are used to estimate the possible effects of various policies upon productive efficiency and the distribution of gains among sellers transmitters and buyers of power static cooperative models are used to calculate the possible outcomes of short run transmission games long run games in which the amount of transmission capacity is a decisition variable are modeled as dynamic noncooperative stackelberg games one conclusion is that under some conditions price regulation and mandatory access could hurt power buyers by removing incentives for building transmission capacity another conclusion is that under a system of voluntary access and price regulation it may be better to allow wheeling prices to exceed the marginal cost of transport rather than to risk losing the benefits of cooperation

do oil price shocks matter evidence for some european countries this paper analyzes the oil price macroeconomy relationship by means of analyzing the impact of oil prices on inflation and industrial production indexes for many european countries using quarterly data for the period 1960 1999 first we test for cointegration allowing for structural breaks among the variables second and in order to account for the possible non linear relationships we use different transformation of oil price data the main results suggest that oil prices have permanent effects on inflation and short run but asymmetric effects on production growth rates furthermore significant differences are found among the responses of the countries to these shocks

voting behavior and information aggregation in elections with private information we analyze two candidate elections in which voters are uncertain about the realization of a state variable that affects the utility of all voters each voter has noisy private information about the state variable we show that the fraction of voters whose vote depends on their private information goes to zero as the size of the electorate goes to infinity nevertheless elections fully aggregate information in the sense that the chosen candidate would not change if all private information were common knowledge equilibrium voting behavior is to a large extent determined by the electoral rule i e if a candidate is required to get at least x percent of the vote in order to win the election then in equilibrium this candidate gets very close to x percent of the vote with probability close to one finally if the distribution from which preferences are drawn is uncertain then elections will generally not satisfy full information equivalence and the fraction of voters who take informative action does not converge to zero

oil and the macroeconomy since world war ii all but one of the u s recessions since world war ii have been preceded typically with a lag of around three fourths of a year by a dramatic increase in the price of crude petroleum this does not mean that oil shocks caused these recessions evidence is presented however that even over the period 1948 72 this correlation is statistically significant and nonspurious supporting the proposition that oil shocks were a contributing factor in at least some of the u s recessions prior to 1972 by extension energy price increases may account for much of post opec macroeconomic performance

oil price fluctuations and singapore economy this study finds that the impact of an oil price shock on the singapore economy is marginal both impulse response and variance decomposition analysis provide reasonable grounds to believe that the impact only had an insignificant adverse effect on singapore s gross domestic product gdp inflation and unemployment rates further analysis on two oil vulnerability measures supports the finding the declining trend of oil intensity in singapore since 1989 and the declining shares of the singapore s expenditure on oil consumption as a percentage of its nominal gdp this study identifies however that the impact of an oil price shock on the singapore economy should not be considered negligible even though it is small

in defense of unanimous jury verdicts mistrials communication and strategic voting the requirement of unanimous jury verdicts in criminal trials is widely believed to reduce the likelihood of convicting the innocent this belief depends largely upon the assumption that jurors will vote nonstrategically based on their impression of the trial evidence recent literature however has questioned this assumption and feddersen and pesendorfer propose a model in which it is never a nash equilibrium for jurors to vote nonstrategically under unanimity rule and equilibrium behavior produces higher probabilities of both convicting the innocent and acquitting the guilty under unanimity rule than under numerous alternatives i extend this work by incorporating two additional features of actual jury procedure the possibility of mistrial and communication among jurors under each circumstance i demonstrate that nonstrategic voting is a nash equilibrium under fairly general conditions and that unanimity performs better than any alternative rule in minimizing probability of trial error and maximizing expected utility

jury verdicts and preference diversity i develop a model of decision making in juries when there is uncertainty about jurors preferences i provide a characterization of the equilibrium strategy under any voting rule and show that nonunanimous rules are asymptotically efficient specifically large juries make the correct decision with probability close to one my analysis also demonstrates that under the unanimous rule large juries almost never convict the defendant the last result contrasts markedly with the literature and suggests that the unanimity rule can protect the innocent only at the price of acquitting the guilty

information is important to condorcet jurors group decision making is very significant in a broad variety of settings this paper deals with committees that make binary decisions and addresses the question of whether informative decisions can be assumed within this framework we show that when using the optimal decision rule informative decision making is a nash equilibrium thus we justify the assumption of informative decision making and provide support for the relevance of assumptions such as independent decision making when using the optimal decision rule

imperfect competition and the effects of energy price increases on economic activity the authors show that modifying the standard neoclassical growth model by assuming that competition is imperfect makes it easier to explain the size of the declines in output and real wages that follow increases in the price of oil plausibly parameterized models of this type are able to mimic the response of output and real wages in the united states the responses are particularly consistent with a model of implicit collusion where markups depend positively on the ratio of the expected present value of future profits to the current level of output copyright 1996 by ohio state university press

superior forecasts of the u s unemployment rate using a nonparametric method we use a nonlinear nonparametric method to forecast unemployment rates this method is an extension of the nearest neighbor method but uses a higher dimensional simplex approach we compare these forecasts with several linear and nonlinear parametric methods based on the work of montgomery et al 1998 and carruth et al 1998 our main result is that due to the nonlinearity in the data generating process the nonparametric method outperforms many other well known models even when these models use more information this result holds for forecasts based on quarterly and on monthly data

efficiency of crude oil markets evidences from informational entropy analysis abstract the role of crude oil as the main energy source for the global economic activity has motivated the discussion about the dynamics and causes of crude oil price changes an accurate understanding of the issue should provide important guidelines for the design of optimal policies and government budget planning using daily data for wti over the period january 1986 march 2011 we analyze the evolution of the informational complexity and efficiency for the crude oil market through multiscale entropy analysis the results indicated that the crude oil market is informationally efficient over the scrutinized period except for two periods that correspond to the early 1990s and late 2000s us recessions overall the results showed that deregulation has improved the operation of the market in the sense of making returns less predictable on the other hand there is some evidence that the probability of having a severe us economic recession increases as the informational efficiency decreases which indicates that returns from crude oil markets are less uncertain during economic downturns

unemployment in britain male unemployment in britain has risen from around 2 per cent in the 1950s to around 17 per cent in 1985 see figure 1 the figures are for male unemployment because there is no consistent series for women 1 even more remarkably unemployment has fallen in only three years out of the last twenty 1973 1978 and 1979 to account for this we need a model that explains both changes in the natural or non accelerating inflation rate of unemployment nairu and deviations from it we use a three equation supply side model centred on the labour market this has two main features the first concerns the determination of employment in the short run the labour demand function that we use cuts through the fruitless debate now raging especially in europe as to whether current unemployment is classical or keynesian according to the classical view employment is too high because real wages are too high according to the keynesian view real wages are not binding and unemployment is high because the product market does not clear with prices too high relative to nominal demand the whole debate is set in the framework of perfect competition yet in perfect competition prices are set by impersonal forces and it is not clear what could possibly stop prices clearing the market it is much more reasonable to think of prices as being set by imperfectly competitive firms existing prices being the best they can think of given the demand they face in this context firms demand for labour will depend on both the real product wage and the level of real aggregate demand this is the demand function we estimate and it conforms both to common sense and to the data however this does not imply that employment can be made to grow without limit by pumping up real demand for in the medium term when price surprises are eliminated our model determines three variables employment real wages and real demand on the basis of three equations an employment equation a price equation and a wage equation thus in the medium term there is a natural level of employment and corresponding to this a natural level of real aggregate demand the second key feature of our model concerns the medium term determination of unemployment in the medium term the planned mark up of wages over prices in wage settlements must be consistent with the mark up of prices over wage costs in employers pricing behaviour for if wage setters try to set real product wages higher than is consistent with employers pricing behaviour this generates ever increasing inflation thus the key to understanding unemployment in the medium term is the behaviour of wage setters if events occur that push them towards too high real wages then unemployment has to rise to offset these influences we shall call these influences wage pressure variables or push factors and they are clearly crucial in understanding unemployment the variables here include the social security system employment protection

sticky prices fair wages and the co movements of unemployment and labor productivity growth abstract this paper studies the co movements of unemployment and labor productivity growth for the u s economy measures of co movements in the frequency domain indicate that co movements between variables differ strongly according to the frequency first long term and business cycle co movements are larger than short term co movements second co movements are negative in the short and long run but positive over the business cycle a new keynesian model that combines nominal rigidity on the goods market sticky prices and real rigidity on the labor market fair wages is shown to be quantitatively consistent with the observed co movements both in the long term and over the business cycle however the model fails to explain the short term co movements

the role of shocks and institutions in the rise of european unemployment the aggregate evidence two key facts about european unemployment must be explained the rise in unemployment since the 1960s and the heterogeneity of individual country experiences while adverse shocks can potentially explain much of the rise in unemployment there is insufficient heterogeneity in these shocks to explain cross country differences alternatively while explanations focusing on labour market institutions explain current heterogeneity well many of these institutions pre date the rise in unemployment based on a panel of institutions and shocks for 20 oecd nations since 1960 we find that the interaction between shocks and institutions is crucial to explaining both stylised facts

unemployment a survey this paper presents a survey of the economics of unemployment it covers competitive and imperfect competition models the role of different methods of wage determination and explanation of postwar unemployment patterns in the oecd countries copyright 1990 by royal economic society

oil price fluctuations and u s dollar exchange rates adding oil prices to the monetary model of exchange rates we find that oil prices significantly explain movements in the value of the u s dollar usd against major currencies from the 1970s to 2008 our long run and forecasting results are remarkably consistent with an oil exchange rate relationship increases in real oil prices lead to a significant depreciation of the usd against net oil exporter currencies such as canada mexico and russia on the other hand the currencies of oil importers such as japan depreciate relative to the usd when the real oil price goes up

the informational effects of competition and collusion in legislative politics we use a mechanism design approach to study the organization of interest groups in an informational model of lobbying interest groups influence the legislature only by communicating private information on their preferences and not by means of monetary transfers interest groups have private information on their ideal points in a one dimensional policy space and may either compete or adopt more collusive behaviors optimal policies result from a trade off between imposing rules which are non responsive to the groups preferences and flexibility that pleases groups better within a strong coalition interest groups credibly share information which facilitates communication of their joint interests helps screening by the legislature and induces flexible policies responsive to the groups joint interests an informativeness effect competing interest groups better transmit information on their individual preferences a screening effect the socially and privately optimal organization of lobbying favors competition between groups only when their preferences are not too congruent with those of the legislature with more congruence a strong coalition is preferred finally within a weak coalition interest groups must design incentive compatible collusive mechanisms to share information such weak coalitions are always inefficient

asymmetric impacts of international energy shocks on macroeconomic activities while limited by its scarcity of natural resources the impacts of energy price changes on taiwan s economic activities have been an important issue for social public and government authorities this study applies the multivariate threshold model to investigate the effects of various international energy price shocks on taiwan s macroeconomic activity by separating energy price changes into the so called decrease and increase regimes we can realize different impacts of energy price changes and their shocks on economic output the results confirm that there is an asymmetric threshold effect for the energy output nexus the optimal threshold levels are exactly where the oil price change is at 2 48 the natural gas price change is at 0 66 and the coal price change is at 0 25 the impulse response analysis suggests that oil price and natural gas shocks have a delayed negative impact on macroeconomic activities 2012 published by elsevier ltd

macroeconomic shocks in a dynamized model of the natural rate of unemployment at the microeconomic level this paper revises and broadens the theory of the equilibrium rate of unemployment the natural rate in a monetary model the authors begin by recreating steven salop s turnover model of the natural rate in its naturally intertemporal version useful findings on impact effects and the adjustment process at the individual firm necessarily excluded by the static version are shown to derive from the dynamized model at the macroeconomic level the authors then provide a general equilibrium analysis of some shocks showing how they drive the equilibrium unemployment rate and in varying ways also disturb the real rate of interest copyright 1992 by american economic association

global unemployment shocks in this paper we use oecd unemployment data 1960 2002 to infer the nature of shocks to unemployment using factor analysis we find that two principal components can account for a large part of the variance of unemployment between and within countries

behind this structural boom the role of asset valuations we are in the midst of a structural boom the force of which has not been seen in this country since the 1920 s after the u s unemployment rate hit 6 percent in late 1994 following its two year recovery many experts assumed that unemployment had regained its naturalrate path the natural unemployment rate in the second half of the 1980 s had been put at around 6 5 percent in several estimates and if the trend reduction in the natural rate brought about by the continuing relative decline of high school dropouts in the labor force and those whose education stopped at the diploma is placed at 0 07 per annum it would have declined on that account to around 6 percent by 1995 phelps and gylfi zoega 1997 furthermore we saw in 1995 the end of

input price shocks and the slowdown in economic growth the case of u k manufacturing this paper provides a theoretical and empirical analysis of the effects of input price shocks on economic growth with a focus on united kingdom manufacturing in the 1970s the theoretical model predicts a discrete decline in output and productivity after an input price rise and a longer run slowdown in productivity growth real wage growth and capital accumulation these features characterize the united kingdom and most other oecd economies after 1973 the empirical results confirm the important role of input prices in recent u k adjustment but also point to an important role for other supply and demand factors two types of explanations have been offered for the sharp deterioration in u k economic performance in the past decade focusing respectively on demand and supply factors a standard keynesian view holds that macroeconomic demand management has been either too expansionary or too contractionary and that rising unemployment and falling output reflect the burden of anti inflationary policies an alternative view holds that various supply shocks are the main source of the poor output performance in this interpretation higher raw material prices particularly oil competition from the newly industrializing countries nics and perhaps an independent decline in productivity growth all have lowered output growth and raised unemployment

hysteresis in unemployment unemployment has risen sharply in a number of countries and it appears to be becoming more persistent the experience of the 1970s and 1980s showed that adverse unemployment shocks could have long lasting effects with very serious economic and social consequences a key mechanism producing these adverse consequences was hysteresis in unemployment whereby temporary rises in unemployment generated by supply and or demand shocks had permanent or at least very persistent effects clearly it is important to understand how hysteresis mechanisms might operate in order to avoid such adverse outcomes on the other hand experience during the subsequent two decades showed that under more favourable macroeconomic conditions it is possible to observe good hysteresis effects now is a very appropriate time to re visit the issue of hysteresis in unemployment in order to avoid the errors of the 1970s and 1980s and if possible to get hysteresis effects working in a positive direction copyright 2011 oxford university press

an empirical analysis of the relationship between oil prices and the chinese macro economy using the quarterly data from the first quarter of 1996 to the fourth quarter of 2014 this paper studies the relationship between oil prices and the chinese macro economy we find output and interest rate respond significantly to oil price shocks further analysis reveals that the positive response of output to oil price shocks is attributed to the influences of oil price shocks on exports the oil price shocks have both longer and deeper effects on the exports of state owned enterprises than on those of foreign investment enterprises moreover the response of exports to oil price shocks is symmetric finally oil prices are found to be useful for forecasting the china s exports in the periods shorter than about two years

wavelet decomposition and regime shifts assessing the effects of crude oil shocks on stock market returns while there is a large body of empirical studies on the relationship between crude oil price changes and stock market returns they have failed to achieve a consensus on this subject in this paper we combine wavelet analysis and markov switching vector autoregressive ms var approach to explore the impact of the crude oil co shocks on the stock market returns for uk france and japan over the period from january 1989 to december 2007 our procedure involves the estimation of the extended ms var model in order to investigate the importance of the resultant wavelet filtering series after removing random components in determining the behavior of the stock market volatilities we show that co shocks do not affect the recession stock market phases except for japan however they significantly reduce moderate and or expansion stock market phases temporarily moreover this negative relationship appears to be more pronounced during the pre 1999 period the empirical findings will prove extremely useful to investors who need to understand the exact effect of international oil changes on certain stocks prices as well as for policy managers who need a more thorough evaluation about the efficiency of hedging policies affected by oil price changes

declining effects of oil price shocks in recent years output responses to oil price shocks have not only been weaker but have also reached their trough earlier this paper builds a model that incorporates a realistic structure of u s petroleum consumption and explores three possible explanations for the changes the possible factors considered are i deregulation in the transportation industry ii improved energy efficiency and iii a lower degree of persistence of oil price shocks under realistic parameter values the three factors play an important role quantitatively accounting for half of the reduction in the largest impact on output of an oil price shock over time

information aggregation in debate who should speak first abstract privately informed individuals speak openly in front of other members of a committee about the desirability of a public decision each individual wishes to appear well informed for any given order of speech committee members may herd by suppressing their true information with individuals of heterogeneous expertise optimizing over the order of speech can improve the extraction of information but not perfectly so it is not always optimal to use the common anti seniority rule whereby experts speak in order of increasing expertise a committee with more able experts may be afflicted by greater herding problems yielding a worse outcome

what happened to the oil price macroeconomy relationship abstract strong evidence is found that oil prices no longer granger cause many u s macroeconomic indicator variables in data after 1973 a number of potential explanations are explored that sample stability issues are responsible that oil prices are now endogenous and that linear and symmetric specifications misrepresent the form of the oil price interaction none of these hypotheses are supported by the data the opec price increases do appear to have had significant impacts while the effects of the price declines of the 1980s are smaller and harder to characterize these results have potentially important implications for the large body of research which utilizes oil prices as an instrumental or explanatory variable

growth wealth and the natural rate is europe s jobs crisis a growth crisis abstract the effect of faster technical progress is studied in our labour turnover model of the natual rate of unemployment in its closed economy version the model implies that in the limit as the steady growth rate is approached the increase in the rate of progress is neutral for the natural unemployment rate its effects are completely offset by the equal increase in the rate of interest it induces however of two small open economies having the same technology level at some date the one where technical progress has always been and always will be faster will have the lower wealth relative to its wage and a lower wage rate relative to future wage rates both effects operate to reduce the natural rate of unemployment whether this theory based hypothesis will be confirmed empirically is a question needing extensive study but a quick comparison of the g7 countries confirms that the proportionate increase of the unemployment rate in recent decades tended to be greater the more pronounced the productivity slowdown

conflicts and common interests in committees committees improve decisions by pooling members independent information but promote manipulation obfuscation and exaggeration of private information when members have conflicting preferences committee decision procedures transform continuous data into ordered ranks through voting this coarsens the transmission of information but controls strategic manipulations and allows some degree of information sharing each member becomes more cautious in casting the crucial vote than when he alone makes the decision based on own information increased quality of one member s information results in his casting the crucial vote more often committees make better decisions for members than does delegation

real interest rate and labor market performance in developing countries using data on 68 developing countries from 1979 to 2008 and controlling for a wide array of factors this paper finds that a rise in the real interest rate increases the unemployment rate and decreases the employment rate the magnitude of these effects is small the results are robust to variations in specification

oil price movements and macroeconomic performance evidence from twenty six oecd countries abstract this study investigates the relationship between oil price movements and macroeconomic aggregates such as gross domestic product gdp consumer prices cpi and unemployment for oecd countries to do this second generation econometric methods have been employed to panel data including panel unit root tests panel cointegration tests and panel long run models panel unit root tests suggest that oil prices plus selected macroeconomic aggregates in oecd countries are non stationary at levels but become stationary at first differences in the existence of multiple structural breaks five structural break points have successfully been investigated in the series of this study during panel unit root and panel cointegration tests durbin h panel co integration tests confirm that there is a long term relationship between oil prices and those macroeconomic aggregates on the other hand results of this study reveal that the price of oil exerts statistically and negatively significant impacts on gdp cpi and unemployment in the case of oecd countries in general

trends in world energy prices the correct identification of the time series path of non renewable energy resources has far reaching consequences for economists and policymakers alike this study builds on the existing literature by employing a data series that includes a sample period of institutional change and recently developed unit root testing procedures besides crude oil natural gas and coal prices are also examined aiming to further the knowledge of non renewable energy resource time paths in order to inform future research and update the conclusions of past studies the unit root tests allow for structural breaks and are based on the procedures developed by zivot and andrews 1992 lumsdaine and papell 1997 and lee and strazicich 2003 finally we investigate whether the trend changes signs in the regimes which are bounded by the structural breaks and quantify the prevalence of the trends over the sample period considered the results show that the trend is not well represented by a single positive or negative trend the variability of the trend suggests that forecasting energy prices should not typically occur about a single trend

causes of the current stagflation since 1975 labour slack has been unusually high in the oecd countries and yet inflation has not diminished the less favourable mix of unemployment and rate of change of inflation which we call stagflation is explained by a fall in the feasible rate of growth of real wages unmatched by a reduction in the constant term in phillips curve to investigate this mechanism conventional wage and price equations are estimated for 19 countries and then used for simulation stagflation has been caused in roughly equal amounts by rising relative import prices and by the fall in the rate of productivity growth in the basic model the phillips curve is assumed not to adapt to falls in feasible real wage growth but in a final section an adaptive wage equation is estimated which confirms that the process of adaptation is slow

real interest rate and labor market performance around the world this article studies the effects of the real interest rate on labor market performance using a much larger sample of countries and more indicators of labor market performance than have been used in previous articles it finds that a rise in the real interest rate increases the unemployment rate raises the share of long term unemployed and reduces the employment rate the magnitude of these effects is very small in the short run but much more pronounced though still fairly small in the long run young people are disproportionately affected the results are robust to variations in specification

are shocks to energy consumption permanent or temporary evidence from 182 countries this article applies univariate and panel data unit root tests to annual panel data for 182 countries over the period 1979 2000 to examine the stationarity properties of per capita energy consumption the univariate unit root test can only reject the unit root null for 56 countries or 31 of the sample at the 10 level or better however univariate unit root tests have low power with short spans of data and therefore failure to reject the unit root null should be treated with caution when we apply the panel data unit root test we find overwhelming evidence that energy consumption is stationary we discuss the policy implications of these findings and offer suggestions for future research

oil price uncertainty and unemployment abstract in this study we empirically search the effects of oil price uncertainty and oil price shocks on u s unemployment rate using a garch in mean var model for the period 1974 q2 2017 q4 based on our findings we show that oil price uncertainty significantly increases unemployment rate in the u s economy likewise our impulse response analysis affirms that a positive oil price shock increases unemployment while the response of unemployment to a negative oil price shock is negative moreover we reveal that unemployment rate reacts to positive and negative shocks asymmetrically more specifically the response of unemployment to negative oil price shocks is negative and slighter in size besides oil price uncertainty is found to magnify the rise in the u s unemployment rate these findings are in keeping with the real options theory which reveals that the uncertainty about goods prices leads firms to postpone or abandon their production and investment and they seem to be robust to the use of different real oil price measures

international transport of captured hbox co _2 who can gain and how much if carbon capture and storage ccs is to become a viable option for low carbon power generation its deployment will require the construction of dedicated co2 transport infrastructure in a scenario of large scale deployment of ccs in europe by 2050 the optimal cost minimising co2 transport network would consist of large international bulk pipelines from the main co2 source regions to the co2 sinks in hydrocarbon fields and saline aquifers which are mostly located in the north sea in this paper we use a shapley value approach to analyse the multilateral negotiation process that would be required to develop such jointly optimised co2 infrastructure first we find that countries with excess storage capacity capture 38 45 of the benefits of multilateral coordination implying that the resource rent of a depleted hydrocarbon field when used for co2 storage is roughly 1 per barrel of original recoverable oil reserves or 2 per boe barrel of oil equivalent of original recoverable gas reserves this adds 25 600 to current estimates of co2 storage cost second countries with a strategic transit location capture 19 of the rent in the case of national pipeline monopolies liberalisation of co2 pipeline construction at eu level could eliminate the transit rent and is shown to reduce by two thirds the differences between countries in terms of cost per tonne of co2 exported reaching agreement on such liberalisation may be politically challenging since the payoffs are shown to be strongly divergent across countries

the time frequency dependence of unemployment on real input prices a wavelet coherency and partial coherency approach abstractwhile the dependence of unemployment on real oil price and real interest rate is an important issue that has been addressed only in the time dimension little is known about the movements o

the impact of tfp growth on steady state unemployment theoretical predictions of the impact of total factor productivity tfp growth on unemployment are ambiguous and depend on the extent to which new technology is embodied in new jobs we evaluate a model with embodied and disembodied technology capitalization and creative destruction effects in econometric estimates with a panel of industrial countries we find a large negative impact of tfp growth on unemployment which implies that embodied technology and creative destruction play no role in the steady state dynamics of unemployment capitalization effects explain some of the estimated impact but a part remains unexplained

relationship between oil prices interest rate and unemployment evidence from an emerging market abstract while the interrelation between oil price changes economic activity and employment is an important issue that has been studied mainly for developed countries little attention has been devoted to inquiries on fluctuations in the price of crude oil and its impact on employment for small open economies adopting an efficiency wage model for equilibrium employment that does not require any assumptions regarding labor supply this paper contributes to the literature by investigating the causality between unemployment and two input prices namely energy crude oil and capital real interest rate in an emerging market turkey for the period 2005 01 2009 08 applying a relatively new technique the toda yamamoto procedure we find that the real price of oil and interest rate improve the forecasts of unemployment in the long run this finding supports the hypothesis that labor is a substitute factor of production for capital and energy

can productivity growth explain the nairu long run evidence from britain 1871 1999 this paper investigates the effect of productivity growth on the non accelerating inflation rate of unemployment nairu over the long run using historically consistent time series for the uk from 1871 to 1999 a two equation model of unemployment and wage setting that incorporates productivity effects is estimated over the whole period allowing for shifts associated with changes in labour market institutions the results indicate that faster productivity growth reduces the nairu but that this goes only part of the way towards explaining wide swings in average unemployment across the decades

a theory of conservatism a free rider problem arises when a group choice between two alternatives has to be made on the basis of privately collected evidence leading to insufficient effort in gathering evidence and an ex ante welfare loss for the group to alleviate the free rider problem the group can commit to a conservative rule whereby the decision is made against the alternative favored by the group s preference or prior when evidence supports it but is not preponderant optimal conservatism increases private incentives to gather evidence and improves the quality of the group decision my result explains why sometimes groups appear overly cautious toward favored alternatives

strategic gaming in electric power markets abstract this paper presents an overview of strategic gaming used for understanding the effective company and regulatory strategies for various market participants under alternative scenarios on pricing and institutional structures for electric power utilizing the england and wales e w power pool as a testbed we develop an aggregate model of payoffs for various stakeholders under specified demand and supply scenarios with strategic moves by these stakeholders as the key input to be evaluated the use of this type of model in a strategic gaming setting is then examined together with a discussion of experience in using this approach in evaluating a particular decision problem regarding network investment strategies in the e w power market

cost assignment model for electrical transmission system expansion an approach through the kernel theory a cost assignment model is proposed for the expansion of electrical transmission systems based on the cooperation and interaction principles that are the foundation of the cooperative game theory a solution algorithm is proposed that considers the development of independent cooperative games for each expansion segment and whose final assignment can be obtained by any game theory solution method kernel nucleolus shapley value etc the kernel method was chosen because it has both equilibrium and transparency characteristics in the computation of final assignments the model accepts both the technical load nature generation levels etc and economic power station marginal costs etc variables that characterize the network to be analyzed cost assignment will depend both on the capacity economic use and the noncoincident maximum use of the expansion lines made by individual and group agents

co fluctuation patterns of per capita carbon dioxide emissions the role of energy markets abstract this paper applies principal component analysis to investigate the linkages or dominant co fluctuation patterns of per capita carbon dioxide emissions across countries for the time period 1950 2000 energy resource world markets are investigated as an offsetting mechanism possibly coordinating emission fluctuations between countries the results of the analysis provide evidence that world energy resource markets are acting as a coordinating mechanism for emission fluctuations in most cases the results also suggest that until recently the dominant emission co fluctuation pattern for developed countries differs from the dominant emission co fluctuation pattern for developing countries the common fluctuation pattern found in the 1984 2000 time period suggests that an offsetting mechanism does exist and will help contain global per capita emissions into the future the strong degree that emissions are linked between countries and energy markets acting as an offsetting mechanism suggests that to be successful a global agreement to address climate change must require emission reductions by all major emitters not just the developed countries

optimal unemployment insurance with monitoring and sanctions this article analyses the design of optimal unemployment insurance in a search equilibrium framework where search effort among the unemployed is not perfectly observable we examine to what extent the optimal policy involves monitoring of search effort and benefit sanctions if observed search is deemed insufficient we find that introducing monitoring and sanctions represents a welfare improvement for reasonable estimates of monitoring costs this conclusion holds both relative to a system featuring indefinite payments of benefits and a system with a time limit on unemployment benefit receipt

a bounded model of time variation in trend inflation nairu and the phillips curve joshua chan would like to acknowledge financial support bythe australian research council via a discovery early career researcher award de150100795

the employment and wage effects of oil price changes a sectoral analysis in this paper we use micro panel data to examine the effects of oil price changes on employment and real wages at the aggregate and industry levels we also measure differences in the employment and wage responses for workers differentiated on the basis of skill level we find that oil price increases result in a substantial decline in real wages for all workers but raise the relative wage of skilled workers the use of panel data econometric techniques to control for unobserved heterogeneity is essential to uncover this result which is completely hidden in ols estimates while the short run effect of an oil price increase on aggregate employment is negative the long run effect is in fact positive we find that changes in oil prices induce changes in employment shares and relative wages across industries however we find little evidence that oil price changes cause labor to consistently flow into those sectors with relative wage increases copyright 1996 by mit press

unit root properties of crude oil spot and futures prices in this article we examine whether wti and brent crude oil spot and futures prices at 1 3 and 6 months to maturity contain a unit root with one and two structural breaks employing weekly data over the period 1991 2004 to realise this objective we employ lagrange multiplier lm unit root tests with one and two endogenous structural breaks proposed by lee and strazicich 2003 minimum lagrange multiplier unit root test with two structural breaks review of economics and statistics 85 1082 1089 2004 minimum lm unit root test with one structural break working paper no 04 17 department of economics appalachian state university we find that each of the oil price series can be characterised as a random walk process and that the endogenous structural breaks are significant and meaningful in terms of events that have impacted on world oil markets

growth unemployment and labor market policy the role of passive labor market policy as a possible reason for the run up in relative unemployment rates in europe in the 1980s has been extensively studied more recently the focus have shifted to lagging growth rates in europe the lisbon strategy reflects these concerns by calling for reforms that ease market access promote flexible labor markets and simplify taxes and market regulation the principal purpose of this paper is to build a simple model in which the possible effects of payroll taxes and employment protection policies on both unemployment and growth can be studied the model is constructed of off the shelf parts found in the literatures on equilibrium unemployment and endogenous growth of the schumpeterian variety the model identifies channels though which both taxes and employment protection mandates can adversely affect growth though innovation jel e24 o40 j64 o31

oil and the macroeconomy when prices go up and down an extension of hamilton s results in an important paper hamilton 1983 demonstrated a strong correlation between oil price changes and gross national product growth in u s data however his study pertained to a period in which all the large oil price movements were upward and thus it left unanswered the question whether the correlation persists in periods of price decline moreover the price variable he used was somewhat distorted by price controls in the 1970s this note investigates whether hamilton s results continue to hold when the sample is extended to include the recent oil market collapse and the oil price variable is corrected for the effects of price controls particular attention is given to the possibility of asymmetric responses to oil price increases and decreases as suggested in the structural employment literature loungani 1986 davis 1987 hamilton 1988 like hamilton i based my investigation on the gnp equation in sims s 1 980b six variable quarterly vector autoregressive model

oil shocks and aggregate macroeconomic behavior the role of monetary policy a recent paper by bernanke gertler and watson 1997 suggests that monetary policy could be used to eliminate any recessionary consequences of an oil price shock this paper challenges this conclusion on two grounds first we question whether the federal reserve actually has the power to implement such a policy for example we consider it unlikely that additional money creation would have succeeded in reducing the fed funds rate by 900 basis points relative to the values seen in 1974 second we point out that the size of the effect that bernanke gertler and watson attribute to oil shocks is substantially smaller than that reported by other researchers primarily due to their choice of a shorter lag length than that used by other researchers we offer evidence in favor of the longer lag length employed by previous research and show that under this specification even the aggressive federal reserve policies proposed would not have succeeded in averting a downturn