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- Title
Hysteresis and Instability in the Natural Rate of Unemployment .
- Authors
Cross, Rod B.
- Abstract
Abstract In this paper, it is pointed out that the long-run Phillips curve genus contains upward and downward sloping species as well as the vertical species. Two models are used: in one the rate of inflation helps determine the natural rate of unemployment, as proposed by Friedman; in the other the process of moving from one inflation rate to another helps shape the natural rate, according to the hysteresis effect proposed by Phelps. In both cases the resulting models are unstable, implying that a vertical long-run Phillips curve will not be regained if disturbed.
- Subjects
PHILLIPS curve; PRICE inflation; UNEMPLOYMENT; HYSTERESIS (Economics)
- Publication
Scandinavian Journal of Economics, 1987, Vol 89, Issue 1, p71
- ISSN
0347-0520
- Publication type
Article
- DOI
10.2307/3440485