Lecture 6

Lecture 6 - Unemployment and the Labour Market Lecture #6...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Unemployment and the labour market Paper 2: Macroeconomics Part IIA Unemployment and the Labour Market Lecture #6 Mauricio Prado jmp200@cam.ac.uk November 17, 2010
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Unemployment and the labour market Paper 2: Macroeconomics Part IIA Today’s outline Phillips curve Expectations formation NAIRU Wage indexation Deflation and the Phillips Curve
Background image of page 2
Unemployment and the labour market Paper 2: Macroeconomics Part IIA Phillips curve We start by where left in the previous lecture: π t = π e t + ( μ + z ) - α u t Now assume that expected inflation is equal to zero, π e t = 0: π t = ( μ + z ) - α u t That is precisely the negative relation between unemployment and inflation that Phillips found for the United Kingdom.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Unemployment and the labour market Paper 2: Macroeconomics Part IIA Inflation vs unemployment The Natural Rate of Unemploymen The Natural Rate of Unemployment and the Phillips Curve Inflation Vs Unempl in Inflation Vs. Unempl. in the United States, 1900 the United States, 1900- 1960 During the period 1900- 1960 in the United States, a low unemployment rate was unemployment rate was typically associated with a high inflation rate, and a high unemployment • The graph shows a negative relation between inflation and a high unemployment rate was typically associated with a low or negative inflation rate. unemployment .
Background image of page 4
Unemployment and the labour market Paper 2: Macroeconomics Part IIA Inflation vs unemployment, 60s Mutations Inflation versus Inflation versus Unemployment in the United States, 1948 1948-1969 1969 The steady decline in the U.S. unemployment 1948 1969 rate throughout the 1960s was associated with a steady increase with a steady increase in the inflation rate.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Unemployment and the labour market Paper 2: Macroeconomics Part IIA Inflation vs unemployment, after 70s Mutations Inflation versus Inflation versus Unemployment in the United States, 1970 1970-2000 2000 Beginning in 1970, the relation between 1970 2000 the unemployment rate and the inflation rate disappeared in rate disappeared in the United States.
Background image of page 6
Unemployment and the labour market Paper 2: Macroeconomics Part IIA Expectations formation Since the 1960s, inflation rate in the U.S. has been consistently
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 18

Lecture 6 - Unemployment and the Labour Market Lecture #6...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online