The current sluggish performance of the US economy follows one of the more remarkable booms in modern history. The late 1990s was a period of simultaneous output and productivity growth,1 low unemployment and stable inflation, culminating in an unemployment rate of only 3.9% in the fourth quarter of the year 2000. The absence of rising inflation during this period came as a surprise to many since the level of the natural rate of unemployment was commonly estimated to be in the range of 5-6% by the mid 1990s. The non-inflationary boom, however, reminds one of another episode where non-monetary forces were strongly at work, namely, the non-deflationary slump in Europe and elsewhere in the 1980s and 90s, which appeared to signal a move to a higher natural rate of unemployment. The modeling of such structural slumps and booms is the task that we have tackled in a number of papers in recent years, the book Structural Slumps being a major milestone.
Econometrics | Finance
Singapore Management University School of Economics and Social Sciences
City or Country
Phelps, Edmund S.; HOON, Hian Teck; and Zoega, Gylfi.
The Structuralist Perspective on Real Exchange Rate, Share Price Level and Employment Path: What Room Is Left for Money?. (2004). 5-2004,. Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/781
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