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Unemployment, disequilibrium and the short run phillips curve: An econometric approach
Author(s) -
Quandt Richard E.,
Rosen Harvey S.
Publication year - 1986
Publication title -
journal of applied econometrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.878
H-Index - 99
eISSN - 1099-1255
pISSN - 0883-7252
DOI - 10.1002/jae.3950010303
Subject(s) - disequilibrium , economics , unemployment , phillips curve , econometrics , econometric model , supply and demand , aggregate demand , aggregate (composite) , macroeconomics , monetary policy , medicine , materials science , composite material , ophthalmology
The paper specifies a disequilibrium model for the aggregate labour market consisting of demand and supply functions for labour, an adjustment equation for wages as well as for prices, a transactions equation and, finally, an equation that relates measured unemployment to vacancies and to excess demand. The model has a more sophisticated treatment of dynamics than earlier disequilibrium models. The parameter estimates and the goodness‐of‐fit are satisfactory and the model's implications for the behaviour of several important variables are sensible. In particular, excess demand estimates computed in various ways are reasonable.