Working Paper: NBER ID: w16374
Authors: Pierpaolo Benigno; Luca Antonio Ricci; Paolo Surico
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.
Keywords: unemployment; productivity; macroeconomic volatility; real wage rigidities
JEL Codes: E0; E20; E40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| long-run unemployment (J64) | variance of productivity growth (O47) |
| variance of productivity growth (O47) | long-run unemployment (J64) |
| volatility of productivity growth (O49) | long-run unemployment (J64) |
| long-run productivity growth (O49) | long-run unemployment (J64) |
| volatility of productivity growth (O49) | labor demand (J23) |
| labor demand (J23) | unemployment (J64) |