Edward N. Gamber

Unemployment, hysteresis, and the natural rate hypothesis

I Introduction Rod Cross et al, University of St. Andrews II Reflections on Hysteresis and the Natural Rate 1. The Irrelevance of the Natural Rate: Lawrence Summers (Harvard University) 2. On the History of Hysteresis: Rod Cross (University of St. Andrews) III The Characteristics of the Unemployed 1. Unemployment, Vacancies and the Long-Term Unemployed: Peter Smith (L.B.S.) Paul Levine (South Bank Polytechnic), Alan Budd (L.B.S.) 2. Characteristics of the Long-Term Unemployed: Evidence from the Labour Force Survey: Stephen Creigh (Department of Employment) 3. Is Unemployment Irreversible?: Peter R. Hughes (Department of Employment) Gillian Hutchinson (Queen Mary College, London) IV Analysis of Hysteresis Effects 1. Union Activity and Wage-Employment Movements: Assar Lindbeck (Institute for International Studies, University of Stockholm) and Dennis Snower (Birkbeck College, London) 2. A Simple Model of Imperfect Competition with Walrasian Features: Huw Dixon (Birkbeck College, London) 3. Unemployment and Worker Quality: Simon Price (University of Bristol) 4. Screening in Labour Markets with Heterogeneous Workers: Inge Schnell (University of Bonn and L.S.E.) IV Hysteresis Effects and the Explanation of Aggregate Unemployment 1. Testing for Multiple Natural Rates of Unemployment in the British Economy: Alan Carruth (University of Kent) and Andrew Oswald (Centre for Labour Economics, L.S.E.) 2. Why is Wage Inflation in Britain so High?: Stephen Nickell (University of Oxford) 3. Phillips Curve Estimates Incorporating a Natural Rate with Hysteresis Effects: David Coe (O.E.C.D.) 4. Hysteresis and European Unemployment: Olivier Blanchard (M.I.T.) and Lawrence Summers (Harvard University) 5. The Natural Rate: Empirical Fact or Theoretical Straitjacket: Tim Jenkinson (Merton College, Oxford) IV Panel Discussion: The Implications of Hysteresis Effects For Unemployment Policy 1. David Stanton (Employment Market Research Unit, Department of Employment) 2. Charles Adams (I.M.F.) 3. Marcus Miller (University of Warwick) 4. Peter McGregor (Fraser of Allander Institute, University of Strathclyde)

The policy content of the yield curve slope

Abstract The slope of the yield curve, defined as the difference between 10 year and 3 month government bond yields, has been shown to predict both inflation and real economic activity. This paper investigates whether the forecasting ability of the yield curve slope is solely due to its relationship to monetary policy or whether it contains independent information about the future course of inflation and output growth. The predictive content of the yield curve slope is measured over three separate monetary policy regimes. The empirical results suggest that the yield curve slope contains independent predictive information about a variable only when the Federal Reserve does not react to changes in that variable.

An application of estimating structural vector autoregression models with long-run restrictions

This paper estimates the contribution of aggregate demand and supply shocks to economic fluctuations. Following Blanchard and Quah we estimate a vector autoregression with long-run restrictions to identify structural demand and supply shocks. We investigate the effects of temporal aggregation on the contribution of these shocks to business cycle fluctuations. Using the industrial production index which is a more cyclically volatile measure of output than GNP, we find results qualitatively similar to theirs. Quantitatively, however, our results differ in that we find a larger fraction of output variation is explained by supply shocks and a larger fraction of unemployment variation is explained by demand shocks.

An Absorption Approach to Modeling the US Current Account

This paper derives and estimates a current account model based on the absorption approach (which views the current account balance as the difference between domestic saving and investment). This approach provides a framework which allows drivers of cross-border financial flows and other determinants of saving and investment to be included in a current account model, an advantage not offered by the elasticity approach (which views the current account balance as the sum of net exports, net investment income, and net unilateral transfer). We estimate and compare vector error-correction models of the absorption and elasticity approaches, with the absorption model nesting the elasticity model. We find that (1) the restrictions imposed by the elasticity model are rejected; and (2) the mean-squared prediction errors of the absorption model are significantly smaller than those of the elasticity model.

A Threshold Analysis of the Relationship Between Governance and Growth

Abstract Quality of governance has been found to be significant in economic growth. We investigate, using a threshold technique, whether the quality of governance matters equally across all levels of economic development. We find that the quality of governance is most significant for only a subset of relatively poor countries, while education is most significant for the poorest countries, and region is most significant for the wealthiest.

Do shifts in federal reserve policy regimes explain interest rate anomalies

Abstract In October 1979 and October 1982 the Federal Reserve announced changes in operating procedures. Recent research suggests that unusual interest rate movements began prior to October 1979 and extend beyond October 1982, and thus, the changes in operating procedures may not be the primary source of these interest rate anomalies. We unexpectedly find support for this conclusion. We defined regime shifts as changes in the Feds respose errant money growth, and we find that the Feds response to errant money growth is not correlated with the unusual interest rate movements during this period.