A Unified Approach to Measuring u*

Crump, Richard K.; Eusepi, Stefano; Giannoni, Marc P.; Şahin, Ayşegül

doi:10.1353/eca.2019.0002

Cited by 48 publications

(58 citation statements)

References 81 publications

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“…Tuzemen (2019) finds that ongoing demographic and technological changes could lower the trend unemployment rate to 4.4 percent by the end of 2022. Our results on the important role of the long-run decline in the inflow rate for the secular decline of the unemployment rate trend are consistent with the findings of Tasci (2012) and Crump, Eusepi, Giannoni and Şahin (2019).…”

supporting

confidence: 92%

“…In contrast, studies that estimate a Philips-curve based natural unemployment rate typically find values lower than the one in this paper for the current period (see, for example, Crump et al (2019) and a discussion in Petrosky-Nadeau and Valletta (2019)). Since in the recent past inflation has not been very responsive to changes in the unemployment rate, and since current inflation remains low, Philips-curve based natural rates cannot differ too much from the actual unemployment rate.…”

Section: How the Trend Unemployment Relates To U*contrasting

confidence: 71%

“…Recent candidate explanations for the decline in the inflow rates to unemployment include demographic and other structural factors. For example, Crump et al (2019) argue that the increase in labor force attachment of females, the decline in job destruction and reallocation intensity, and the dual aging of workers and firms drive the long-run decline in the unemployment inflow rate. Pries and Rogerson (2019) argue that improved match quality is an important driver of the secular decline in the employment-to-unemployment inflow rate.…”

Section: Discussionmentioning

confidence: 99%

“…For example,Crump et al (2019) distinguish between a long-run u*, the unemployment rate trend unrelated to inflation, and a short-run u*, the unemployment rate consistent with a non-accelerating inflation rate.…”

mentioning

confidence: 99%

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Why Is Current Unemployment So Low?

Hornstein¹,

Kudlyak²

2020

ERWP

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Current unemployment, as of 2019Q4, is so low not because of unusually high job finding rates out of unemployment, but because of unusually low entry rates into unemployment. The unusually low entry rates, both from employment and from out of the labor force, reflect a long-run downward trend, and have lowered the unemployment rate trend over the recent decade. In fact, the difference between the current unemployment rate and unemployment rates at the two previous cyclical peaks in 2000 and 2007 is more than fully accounted for by the decline in its trend. This suggests that the current low unemployment rate does not indicate a labor market that is tighter than in 2000 or 2007.

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supporting

confidence: 92%

Section: How the Trend Unemployment Relates To U*contrasting

confidence: 71%

Section: Discussionmentioning

confidence: 99%

mentioning

confidence: 99%

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Why Is Current Unemployment So Low?

Hornstein¹,

Kudlyak²

2020

ERWP

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“…An emerging literature has already started to explore these consequences. Glover and Short (2018) and Hopenhayn, Neira, and Singhania (2018) link the demographic channel to the decline in the labor share; Pugsley and Şahin (2019) show that the emergence of jobless recoveries can be traced back to the decline in firm entry and subsequent aging of firms; Alon, Berger, Dent, and Pugsley (2018), Atkeson, Burstein, and Chatzikonstantinou (2018) and Peters and Walsh (2019) link the de-mographic driven declines in entry to the slowdown of aggregate productivity growth; and Crump, Eusepi, Giannoni, and Şahin (2019) argue that the demographic channel is an important driver of the secular downward trend in unemployment. If present trends in fertility and immigration continue, the startup rate will remain near its current levels, and understanding the equilibrium implications of slowing labor force growth will be especially relevant.…”

Section: Resultsmentioning

confidence: 99%

Demographic Origins of the Startup Deficit

2019

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Inflation expectations and nonlinearities in the Phillips curve

Doser

Nunes

Rao

et al. 2023

J of Applied Econometrics

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This paper shows that a simple form of nonlinearity in the Phillips curve can explain why, following the Great Recession, inflation did not decrease as much as predicted by linear Phillips curves, a phenomenon known as the missing disinflation. We estimate a piecewise-linear specification and document that the data favor a model with two regions, with the response of inflation to an increase in unemployment slower in the region where unemployment is already high. Nonlinearities remain important, even when we account for other factors proposed in the literature, such as consumer expectations of inflation or financial frictions. However, studying a range of specifications with different measures of inflation and economic activity, we conclude that, in most cases, consumer expectations are more robust than nonlinearities. We find that the role of consumer expectations was especially important in the 1970s and '80s, during a turbulent rise in inflation followed by the Volcker disinflation; the nonlinearities make disinflation more problematic and require the inflation expectations process to be more forward-looking during this period, thereby putting a larger weight on survey expectations. We conclude that a nonlinear Phillips curve with forward-looking survey expectations can be a useful tool to understand inflation dynamics during episodes of rapid disinflation and persistent inflation.

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A Unified Approach to Measuring u*

Cited by 48 publications

References 81 publications

Why Is Current Unemployment So Low?

Why Is Current Unemployment So Low?

Demographic Origins of the Startup Deficit

Inflation expectations and nonlinearities in the Phillips curve

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