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References
Clarida et al. (1998: 1045) estimate the parameters in the policy rule of the Bundesbank after 1979 and find that the parameter a1 is approximately 1.3, while a2 is approximately 0.25. We also considered the case where the disturbance term in the policy equation is nonstationary, but this turned out to be inconsistent with the data.
See also Bleakley and Fuhrer (1997) on the factors determining the Beveridge curve.
Hysteresis as an explanation for persistently high European unemployment has been introduced by Blanchard and Summers (1986).
See also Solow (1999: 11).
For a formal exposition, see Buiter (1987).
Ball finds that b = 0.05 corresponds to typical values for the steady state short-term unemployment rate in OECD countries, while the choice of a = 0.36 is consistent with the findings in Roberts (1995) of the effects of unemployment on inflation using annual data.
Mankiw (2001) introduces hysteresis into a Phillips curve model with unemployment by specifying the process for the natural rate of unemployment as ūt = 0.9ūt−1+0.1ut−1.
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© 2005 Springer-Verlag Berlin Heidelberg
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(2005). Revisiting the Natural Rate Hypothesis. In: Monetary Policy and the German Unemployment Problem in Macroeconomic Models. Kieler Studien - Kiel Studies, vol 334. Springer, Berlin, Heidelberg. https://doi.org/10.1007/3-540-37679-8_6
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DOI: https://doi.org/10.1007/3-540-37679-8_6
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