Tweet
Originally posted by VetLegion
I mean some countries seem to have unemployment at 4%. Should all the rest of us panic?
I mean some countries seem to have unemployment at 4%. Should all the rest of us panic?
-
Yes.Golfing since 67 -
The natural rate of unemployment has traditionally been considered 4% in developed economies. The idea being that there will always be people unemployed while they look for new work and after graduating from courses.
If the unemployment rate falls below 4%, then economists argue the economy is overheating and there is a labor shortage.
In the early 1990s, American economists started talking about a natural unemployment rate of 8%, arguing that even in strong economies, unemployment remained at that level.
The 8% concept was discarded when the unemployment fell to 4% level in the U.S.Golfing since 67Comment
-
Yes, yes I know that's yelling. Eloquent masterpieces, here I come.Originally posted by Cort Haus
Not all capitals, please - that's shouting. Feel free to use long sentences and the word wrap feature, though.
Text messages are of limited length, and IMing talk has someone hanging around at the other end waiting for your bit, so in both of these cases there is reason for heavy abbreviating. On here though, we all like to show of our extensive literary talents and consider our posts to be eloquent masterpieces.
Comment
-
The natural rate of unemployment was originally considered to mean the rate of unemployment at which the labor market was in equilibrium. I.e., natural rate = frictional unemployment (people who are between jobs) + structural unemployment (mismatch of worker skills with vacancies). This concept was eventually given focus to a specific empirical meaning: the Non Inflation Accelerating Rate of Unemployment (NAIRU), the rate of unemployment at which inflation will not accelerate. The specific value of NAIRU depends on a whole variety of factors which can be illustrated with a quick derivation.
Start with an aggregate production function for the economy
(1) Q = TxF[K, (1-u)L]
where
Q = output of economy
T = technical change parameter
K = capital stock
L = labor hours
u = unemployment rate
(capital letters are always stocks, lower case letters are rates or shares)
This equation can also be expressed in terms of annual rates and factor shares
(2) q = t + [ak + (1-a)(1-u)l]
where
a is capital’s share of total national income (about 0.33 in the US)
(1-a) is labor’s share (about 0.67 in the US)
and t is the annual rate of (multifactor) productivity increase.
Now bring in the monetary identity for the economy (see e.g., Denmark public finance thread)
(3) MV = PQ
where
M = money supply
V = money velocity
P = price level
Q = output of economy (as above)
This equation can also be expressed as rates
(4) m + v = p + q
(velocity is very close to constant, so usually v = 0)
Substituting (2) into (4) results in a structural (i.e. implicit) equation relating the unemployment rate u to the inflation rate p
(5) m = p + t + [ak + (1-a)(1-u)l]
To find the value of NAIRU, plug in m, t, a, k, and l, set p = 0, and solve for u.Last edited by Adam Smith; January 4, 2007, 22:35.Old posters never die.
They j.u.s.t..f..a..d..e...a...w...a...y....Comment
-
How do you determine the technical change parameter?Golfing since 67Comment
-
Oh, God.Life is not measured by the number of breaths you take, but by the moments that take your breath away.
"Hating America is something best left to Mobius. He is an expert Yank hater.
He also hates Texans and Australians, he does diversify." ~ BraindeadComment
-
I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
-
I think that.Originally posted by Cort Haus
PS - No offence b etor, but may I just point out that we generally write in full English here, not txt-spk, with full punctuation, capital letters where appropriate and vague approximations to correct spelling etc. You are clearly getting an education - so why not use it? Like I said, please don't take offence.
You are not quite.
Taking into account
Some posters.
Here.
.Comment
-
Like,Originally posted by Verto
I think that.
You are not quite.
Taking into account
Some posters.
Here.
.
Proteus_
MST?THEY!!111 OMG WTF LOL LET DA NOMADS AND TEH S3D3NTARY PEOPLA BOTH MAEK BITER AXP3REINCES
AND TEH GRAAT SINS OF THERE [DOCTRINAL] INOVATIONS BQU3ATH3D SMAL
AND!!1!11!!! LOL JUST IN CAES A DISPUTANT CALS U 2 DISPUT3 ABOUT THEYRE CLAMES
DO NOT THAN DISPUT3 ON THEM 3XCAPT BY WAY OF AN 3XTARNAL DISPUTA!!!!11!! WTFComment
-
No that.
Is not What I had.
In Mind.Comment
-
Complain to lotm first.Originally posted by Cort Haus
PS - No offence b etor, but may I just point out that we generally write in full English here, not txt-spk, with full punctuation, capital letters where appropriate and vague approximations to correct spelling etc. You are clearly getting an education - so why not use it? Like I said, please don't take offence.Comment
-
You are going to make Cort Haus mad if you keep using this txt spk.Originally posted by Adam Smith
(1) Q = TxF[K, (1-u)L]
where
Q = output of economy
T = technical change parameter
K = capital stock
L = labor hours
u = unemployment rate
(capital letters are always stocks, lower case letters are rates or shares)
This equation can also be expressed in terms of annual rates and factor shares
(2) q = t + [ak + (1-a)(1-u)l]
where
a is capital’s share of total national income (about 0.33 in the US)
(1-a) is labor’s share (about 0.67 in the US)
and t is the annual rate of (multifactor) productivity increase.
Now bring in the monetary identity for the economy (see e.g., Denmark public finance thread)
(3) MV = PQ
where
M = money supply
V = money velocity
P = price level
Q = output of economy (as above)
This equation can also be expressed as rates
(4) m + v = p + q
(velocity is very close to constant, so usually v = 0)
Substituting (2) into (4) results in a structural (i.e. implicit) equation relating the unemployment rate u to the inflation rate p
(5) m = p + t + [ak + (1-a)(1-u)l]
To find the value of NAIRU, plug in m, t, a, k, and l, set p = 0, and solve for u.
ACK!
Don't try to confuse the issue with half-truths and gorilla dust!Comment
-
Don't be mean to newbies. They give our mods food and a shelter
I will never understand why some people on Apolyton find you so clever. You're predictable, mundane, and a google-whore and the most observant of us all know this. Your battles of "wits" rely on obscurity and whenever you fail to find something sufficiently obscure, like this, you just act like a 5 year old. Congratulations, molly.
Asher on molly bloomComment
-
Re: What is the Natural Rate of Employment?
Actually, to an educated person, they don't.Originally posted by VetLegion
Obviously, to a thinking person both sentences carry the same information. But for propaganda purposes, they are very different. Why is the first form never used?
This is basic economics mistake number 2 from you today.12-17-10 Mohamed Bouazizi NEVER FORGET
Stadtluft Macht Frei
Killing it is the new killing it
Ultima Ratio RegumComment
-
Basic definitions for VetLegion:
Labour force: the population greater than 15 years old either employed or looking for work
Unemployment rate: the number of people in the labour force looking for work divided by the total number of people in the labour force
Employment rate: the number of people 15 years and older who are employed divided by the total number of people 15 years and older
Participation rate: the number of people in the labour force divided by the total number of people 15 years and older
In other words, U+E < 100%
In fact, U+E/P = 100%12-17-10 Mohamed Bouazizi NEVER FORGET
Stadtluft Macht Frei
Killing it is the new killing it
Ultima Ratio RegumComment
Comment