Department of Economics and Business - Universitat Pompeu Fabra

Title:: Hysteresis and the European unemployment problem revisited
Author:: Jordi Galí
Date:: June 2015
Abstract:: The unemployment rate in the euro area appears to contain a significant nonstationary component, suggesting that some shocks have permanent effects on that variable. I explore possible sources of this nonstationarity through the lens of a New Keynesian model with unemployment, and assess their empirical relevance.
Keywords:: wage stickiness, New Keynesian model, unemployment fluctuations, Phillips curve, insider-outsider model.
JEL codes:: E24, E31, E32.
Area of Research:: Macroeconomics and International Economics

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