State Natural Rates of Unemployment

17 Pages Posted: 5 May 2016  

Ryan H. Murphy

Southern Methodist University (SMU)

Date Written: May 3, 2016

Abstract

I construct estimates for the natural rate of unemployment by state and year from 1981 to 2013. The estimate is conditional on a set of standard public finance variables and state fixed effects. While year fixed effects were used to estimate the model, the year fixed effects are dropped and replaced with a value that forces the national natural rate of unemployment to equal the natural rate estimated by the Congressional Budget Office. Significant cross-sectional variation and variation across time is found. These estimates may be policy relevant due to the lack of a case for regional fiscal stimulus when an economy is operating below its natural rate.

Keywords: NAIRU, Natural Rate of Unemployment, Regional Economics

JEL Classification: R23, E24

Suggested Citation

Murphy, Ryan H., State Natural Rates of Unemployment (May 3, 2016). Available at SSRN: https://ssrn.com/abstract=2774537 or http://dx.doi.org/10.2139/ssrn.2774537

Ryan H. Murphy (Contact Author)

Southern Methodist University (SMU) ( email )

6212 Bishop Blvd.
Dallas, TX 75275
United States

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