NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Unemployment and Productivity in the Long Run: The Role of Macroeconomic Volatility

Pierpaolo Benigno, Luca Antonio Ricci, Paolo Surico

NBER Working Paper No. 16374
Issued in September 2010
NBER Program(s):   EFG   LS   ME   PR

The paper presents a new empirical regularity between the volatility of productivity growth and long-run unemployment, for a given level of long-run productivity growth. A theoretical framework based on asymmetric real wage rigidities is shown to have the potential to rationalize this finding. The model tends to fit U.S. long-run unemployment better than a specification based on long-run productivity growth only, especially during the Great Moderation and the Great Recession.

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This paper was revised on November 13, 2013

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Document Object Identifier (DOI): 10.3386/w16374

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