THE NATURAL RATE OF UNEMPLOYMENT : REFLECTIONS ON 25 YEARS OF THE HYPOTHESIS

ROD CROSS,OLIVIER BLANCHARD

ISBN 10: 0521483301 / ISBN 13: 9780521483308

Published by Cambridge University Press, 1995

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Bibliographic Details

• Title: THE NATURAL RATE OF UNEMPLOYMENT : REFLECTIONS ON 25 YEARS OF THE HYPOTHESIS
• Publisher: Cambridge University Press
• Publication Date: 1995
• Language: English
• ISBN 10: 0521483301
• ISBN 13: 9780521483308
• Binding: Soft cover
• Condition: Brand New

About this title

Synopsis

The natural rate of unemployment hypothesis proposed in the 1960s has dominated thought about the causes of, and possible solutions to, unemployment. It asserts that only supply-side measures can achieve sustainable reductions in unemployment. In the 1980s, however, European unemployment rates rose sharply, despite supply-side innovations to economic policy inspired by the hypothesis. These essays reflect retrospectively on the state of the hypothesis and look forward to the emergence of a new wisdom regarding unemployment.

From the Back Cover

For 25 years, theory about the causes of, and possible solutions to, the problem of unemployment has been dominated by Phelps and Friedman's natural rate of unemployment hypothesis. This postulates that the equilibrium rate of unemployment consistent with steady inflation is determined by structural variables: sustainable reductions in unemployment can be achieved only by measures to change underlying microeconomic structures, such as benefit and pay bargaining systems. Belief in the hypothesis has faltered since the 1980s, the hypothesis being unable to explain the dramatic upward shifts in European unemployment rates. These essays reflect upon the fundamental structures underlying the hypothesis, assess the related evidence, and look forward, suggesting possible modifications. In contrast to the single rate postulated by the natural rate hypothesis, several of the contributors propose that there are ranges of unemployment rates consistent with steady inflation.