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Unemployment and Capital Accumulation in Interwar Britain

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  • Chouliarakis, George

Abstract

The paper uses the Kalman filter method to estimate the time-varying NAIRU of interwar Britain and shows that, during the 1930s, the NAIRU drifted upwards by approximately four per cent. Also, the paper presents an imperfect competition model which predicts that, in the medium run, the NAIRU depends on labour market institutions, unanticipated total factor productivity growth and capital accumulation. Econometric evidence based on data from interwar Britain does not contradict this hypothesis. In particular, it supports the hypothesis that the rising trend of the NAIRU during the 1930s is partly due to a slowdown in capital accumulation demonstrating, thus, that adverse demand shocks may have long-lasting effects.

Suggested Citation

  • Chouliarakis, George, 2003. "Unemployment and Capital Accumulation in Interwar Britain," Economics Discussion Papers 8864, University of Essex, Department of Economics.
    • Handle: RePEc:esx:essedp:8864
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    File URL: https://repository.essex.ac.uk/8864/
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    References listed on IDEAS

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    8. Blanchard, Olivier, 1998. "Revisiting European Unemployment : Unemployment, Capital Accumulation and Factor Prices," Research Series, Economic and Social Research Institute (ESRI), number GLS28.
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