State Natural Rates of Unemployment
17 Pages Posted: 5 May 2016
Date Written: May 3, 2016
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: Suggested Citation