IDEAS home Printed from https://ideas.repec.org/p/zbw/kondp2/87.html
   My bibliography  Save this paper

Unemployment and stability of inflation: The concept of the NAIRU in an international perspective and an estimation for Germany using business survey data

Author

Listed:
  • Franz, Wolfgang
  • Hofmann, Thomas

Abstract

A common method of evaluating the scope for demand expansion is to try to estimate a threshold rate of unemployment above which policies of demand stimulus are non-inflationary. However, this non-accelerating inflation rate of unemployment (NAIRU) seems to have been anything but stable over the past decade. In the absence of major shocks it is an increasingly popular argument that the NAIRU itself depends on the time-path of previous actual unemployment. This effect has been christened "hysteresis" and various channels through which hysteresis may work are discussed in this paper. Moreover, we estimate the NAIRU for the Federal Republic of Germany using categorical business survey data for inflationary expectations.

Suggested Citation

  • Franz, Wolfgang & Hofmann, Thomas, 1989. "Unemployment and stability of inflation: The concept of the NAIRU in an international perspective and an estimation for Germany using business survey data," Discussion Papers, Series II 87, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    • Handle: RePEc:zbw:kondp2:87
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/101571/1/726322814.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. repec:bla:econom:v:53:y:1986:i:210(s):p:s219-44 is not listed on IDEAS
    2. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," NBER Chapters, in: NBER Macroeconomics Annual 1986, Volume 1, pages 15-90, National Bureau of Economic Research, Inc.
    3. Jeffrey Sachs, 1986. "High Unemployment in Europe: Diagnosis and Policy Implications," NBER Working Papers 1830, National Bureau of Economic Research, Inc.
    4. Dreze, Jacques H., 1987. "Underemployment equilibria : From theory to econometrics and policy," European Economic Review, Elsevier, vol. 31(1-2), pages 9-34.
    5. Blanchard, Olivier J. & Summers, Lawrence H., 1987. "Hysteresis in unemployment," European Economic Review, Elsevier, vol. 31(1-2), pages 288-295.
    6. Konig, Heinz & Nerlove, Marc & Oudiz, Gilles, 1981. "On the formation of price expectations : An analysis of business test data by log-linear probability models," European Economic Review, Elsevier, vol. 16(1), pages 103-138.
    7. Franz, Wolfgang, 1983. "The past decade's natural rate and the dynamics of german unemployment: A case against demand policy?," European Economic Review, Elsevier, vol. 21(1-2), pages 51-76.
    8. repec:bla:econom:v:53:y:1986:i:210(s):p:s23-34 is not listed on IDEAS
    9. repec:bla:econom:v:53:y:1986:i:210(s):p:s35-52 is not listed on IDEAS
    10. repec:bla:scandj:v:87:y:1985:i:2:p:411-28 is not listed on IDEAS
    11. repec:bla:econom:v:53:y:1986:i:210(s):p:s53-74 is not listed on IDEAS
    12. Lindbeck, Assar & Snower, Dennis J, 1986. "Wage Setting, Unemployment, and Insider-Outsider Relations," American Economic Review, American Economic Association, vol. 76(2), pages 235-239, May.
    13. Hargreaves Heap, S P, 1980. "Choosing the Wrong 'Natural' Rate: Accelerating Inflation or Decelerating Employment and Growth?," Economic Journal, Royal Economic Society, vol. 90(359), pages 611-620, September.
    14. Michael Bruno & Jeffrey D. Sachs, 1985. "Economics of Worldwide Stagflation," NBER Books, National Bureau of Economic Research, Inc, number brun85-1.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:diw:diwwpp:dp1 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paqué, Karl-Heinz, 1989. "Wage gaps, hysteresis and structural unemployment: The West German labour market in the seventies and eighties," Kiel Working Papers 358, Kiel Institute for the World Economy (IfW Kiel).
    2. Franz, Wolfgang, 1990. "Hysteresis in Economic Relationships: An Overview," Empirical Economics, Springer, vol. 15(2), pages 109-125.
    3. Zwick, Thomas, 1999. "Innovations induce asymmetric employment movements," ZEW Discussion Papers 99-24, ZEW - Leibniz Centre for European Economic Research.
    4. Ansgar Belke & Matthias Göcke & Laura Werner, 2014. "Hysteresis Effects in Economics – Different Methods for Describing Economic Path-dependence," Ruhr Economic Papers 0468, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    5. Matthias Goecke, 2019. "Economic Hysteresis with Multiple Inputs - A Simplified Treatment," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu, vol. 17(1-B), pages 98-113.
    6. Willem H. Buiter, 1987. "The Right Combination of Demand and Supply Policies: The Case for a Two-Handed Approach," NBER Working Papers 2333, National Bureau of Economic Research, Inc.
    7. repec:diw:diwwpp:dp1 is not listed on IDEAS
    8. Bianchi, Marco & Zoega, Gylfi, 1997. "Challenges facing natural rate theory," European Economic Review, Elsevier, vol. 41(3-5), pages 535-547, April.
    9. Paqué, Karl-Heinz, 1990. "Unemployment in West Germany: A survey of explanations and policy options," Kiel Working Papers 407, Kiel Institute for the World Economy (IfW Kiel).
    10. Michael C. Burda & Jeffrey D. Sachs, 1987. "Institutional Aspects of High Unemployment in the Federal Republic of Germany," NBER Working Papers 2241, National Bureau of Economic Research, Inc.
    11. Belke, Ansgar & Göcke, Matthias & Werner, Laura, 2014. "Hysteresis Effects in Economics – Different Methods for Describing Economic Path-dependence," Ruhr Economic Papers 468, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    12. Lucrezia Reichlin, 1989. "Fluctuations et croissance en Europe : une analyse empirique," Revue de l'OFCE, Programme National Persée, vol. 26(1), pages 71-93.
    13. repec:zbw:rwirep:0468 is not listed on IDEAS
    14. Ernesto Screpanti, 1996. "A Pure Insider Theory of Hysteresis in Employment and Unemployment," Review of Radical Political Economics, Union for Radical Political Economics, vol. 28(4), pages 93-112, December.
    15. Christopher A. Pissarides, 2003. "Unemployment in Britain: A European Success Story," CESifo Working Paper Series 981, CESifo.
    16. Boyer, Robert, 1992. "La crise de la macroéconomie, une conséquence de la méconnaissance des institutions?," L'Actualité Economique, Société Canadienne de Science Economique, vol. 68(1), pages 43-68, mars et j.
    17. Arestis, Philip & Mariscal, Iris Biefang-Frisancho, 1998. "Capital shortages and asymmetries in UK unemployment," Structural Change and Economic Dynamics, Elsevier, vol. 9(2), pages 189-204, June.
    18. Odile Chagny & Frédéric Reynès & Henri Sterdyniak, 2002. "The equilibrium rate of unemployment : a theoretical discussion and an empirical evaluation for six OECD countries," SciencePo Working papers Main hal-01027421, HAL.
    19. Marjan Petreski & Nikica Mojsoska-Blazevski, 2013. "Real Wages in the Manufacturing Industry in Macedonia: The Role of Macroeconomic Factors, with Reference to Recession Times," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 26(4), pages 113-126, January.
    20. Burda, Michael C. & Seele, Stefanie, 2016. "No role for the Hartz reforms? Demand and supply factors in the German labor market, 1993-2014," SFB 649 Discussion Papers 2016-010, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    21. Patrice Borda & Nlandu Mamingi, 2007. "On the persistence of unemployment in small open economies," Working Papers hal-04053066, HAL.
    22. Olivier Blanchard & Lawrence F. Katz, 1997. "What We Know and Do Not Know about the Natural Rate of Unemployment," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 51-72, Winter.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:kondp2:87. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/fwkonde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.