Unemployment and Productivity in the Long Run: The Role of Macroeconomic Volatility

39 Pages Posted: 20 Sep 2010 Last revised: 21 Oct 2010

See all articles by Pierpaolo Benigno

Pierpaolo Benigno

Luiss Guido Carli University; Einaudi Institute for Economics and Finance (EIEF)

Luca A. Ricci

International Monetary Fund (IMF) - Research Department

Paolo Surico

London Business School - Department of Economics; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 4 versions of this paper

Date Written: September 2010

Abstract

The paper presents a new empirical regularity between the volatility of productivity growth and long-run unemployment, for a given level of long-run productivity growth. A theoretical framework based on asymmetric real wage rigidities is shown to have the potential to rationalize this finding. The model tends to fit U.S. long-run unemployment better than a specification based on long-run productivity growth only, especially during the Great Moderation and the Great Recession.

Suggested Citation

Benigno, Pierpaolo and Ricci, Luca Antonio and Surico, Paolo, Unemployment and Productivity in the Long Run: The Role of Macroeconomic Volatility (September 2010). NBER Working Paper No. w16374. Available at SSRN: https://ssrn.com/abstract=1678917

Pierpaolo Benigno (Contact Author)

Luiss Guido Carli University

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Einaudi Institute for Economics and Finance (EIEF) ( email )

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Luca Antonio Ricci

International Monetary Fund (IMF) - Research Department ( email )

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Paolo Surico

London Business School - Department of Economics ( email )

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United Kingdom

HOME PAGE: http://sites.google.com/site/paolosurico

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

HOME PAGE: http://sites.google.com/site/paolosurico

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