naturalrate

naturalrate - A Theory of The Natural Rate of Unemployment...

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A Theory of The Natural Rate of Unemployment Mark L. J. Wright February 17, 2009 Abstract These notes clarify discussion in class that relate to questions on previous exams. INTRODUCTION In class, we discusses a model of the natural rate of unemployment. In that model, the size of the population did not change over time. On some past exams, I ahve asked students to solve variants of this mkodel in which the population is changing over time. The point of those questions is that it matter whether new entrants to the population (and hence also, to the workforce, since everyone wants to work in this model) start with a job, or start unemployed. L t is the size of the labor force at a point in time t , E t is the number of employed at a point in time t , U t is the number of unemployed at a point in time t , and that u t = U t =L t is the unemployment rate at that point in time. We assume that every period, the fraction s of employed workers are SEPARATED from their jobs, and the fraction
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naturalrate - A Theory of The Natural Rate of Unemployment...

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