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Evidence and Theory on the Cyclical Asymmetry in Unemployment Rate Fluctuations

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  • David Andolfatto

Abstract

A number of recent empirical studies have identified the presence of a cyclical asymmetry in unemployment rate fluctuations. In particular, during a recession the unemployment rate increases sharply, while during an expansion the unemployment rate declines only gradually. The purpose of this paper is to demonstrate that this cyclical asymmetry can be explained in an empirically plausible manner by the optimal search activities of individuals in the economy.

Suggested Citation

  • David Andolfatto, 1997. "Evidence and Theory on the Cyclical Asymmetry in Unemployment Rate Fluctuations," Canadian Journal of Economics, Canadian Economics Association, vol. 30(3), pages 709-721, August.
    • Handle: RePEc:cje:issued:v:30:y:1997:i:3:p:709-21
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    Cited by:

    1. Congressional Budget Office, 2022. "A Markov-Switching Model of the Unemployment Rate: Working Paper 2022-05," Working Papers 57582, Congressional Budget Office.
    2. Robert E. Hall & Marianna Kudlyak, 2022. "Why Has the US Economy Recovered So Consistently from Every Recession in the Past 70 Years?," NBER Macroeconomics Annual, University of Chicago Press, vol. 36(1), pages 1-55.
    3. Domenico Ferraro & Giuseppe Fiori, 2018. "The Scarring Effect of Asymmetric Business Cycles," 2018 Meeting Papers 283, Society for Economic Dynamics.
    4. Bårdsen Gunnar & Hurn Stanley & McHugh Zöe, 2012. "Asymmetric Unemployment Rate Dynamics in Australia," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 16(1), pages 1-22, January.
    5. Bernstein, Joshua & Richter, Alexander W. & Throckmorton, Nathaniel A., 2021. "Cyclical net entry and exit," European Economic Review, Elsevier, vol. 136(C).
    6. Kurt Graden Lunsford, 2023. "Business Cycles and Low-Frequency Fluctuations in the US Unemployment Rate," Working Papers 23-19, Federal Reserve Bank of Cleveland.
    7. Domenico Ferraro, 2018. "The Asymmetric Cyclical Behavior of the U.S. Labor Market," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 30, pages 145-162, October.
    8. Domenico Ferraro & Giuseppe Fiori, 2023. "Search Frictions, Labor Supply, and the Asymmetric Business Cycle," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(1), pages 5-42, February.
    9. repec:ebl:ecbull:v:3:y:2002:i:11:p:1-13 is not listed on IDEAS
    10. Boriss Siliverstovs, 2005. "The Bi-parameter Smooth Transition Autoregressive model," Economics Bulletin, AccessEcon, vol. 3(23), pages 1-11.
    11. Philip M. Bodman, 1998. "Asymmetry and Duration Dependence in Australian GDP and Unemployment," The Economic Record, The Economic Society of Australia, vol. 74(227), pages 399-411, December.
    12. Ivan D. Trofimov, 2024. "A Time Series Analysis of Corporate Profit Rates in Selected Developed Economies: Asymmetries, Non-linearity and Mean Reversion," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 22(2), pages 303-338, June.
    13. Botelho, Vasco & Foroni, Claudia & Renzetti, Andrea, 2023. "Labour at risk," Working Paper Series 2840, European Central Bank.
    14. Domenico Ferraro, 2023. "Fast Rises, Slow Declines: Asymmetric Unemployment Dynamics with Matching Frictions," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(2-3), pages 349-378, March.
    15. Domenico Ferraro, 2018. "The Asymmetric Cyclical Behavior of the U.S. Labor Market," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 30, pages 145-162, October.

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