A Simple Nonlinear Dynamic Model for Unemployment: Explaining the Spanish Case
Spanish unemployment is characterized by three distinct regimes of low, medium, and high unemployment and by a fast transition between them. This paper presents a simple nonlinear dynamic model that is able to explain this behavior with multiple equilibria and j...
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Wiley
2008-01-01
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| Series: | Discrete Dynamics in Nature and Society |
| Online Access: | http://dx.doi.org/10.1155/2008/981952 |
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| Summary: | Spanish unemployment is characterized by three distinct regimes of low, medium, and
high unemployment and by a fast transition between them. This paper presents a simple nonlinear
dynamic model that is able to explain this behavior with multiple equilibria and jumps describing the
transition between equilibria. The model has only a small number of parameters capturing the
fundamentals of labor markets and macroeconomic and institutional factors. The model is capable
of generating unemployment dynamics that encompass the “unique” natural rate
hypothesis, the structuralist hypothesis, and the hysteresis hypothesis. |
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| ISSN: | 1026-0226 1607-887X |