Vicious and virtuous circles - The political economy of unemployment in interwar UK and USA

Matthews, Kent Gerard Patrick ORCID: https://orcid.org/0000-0001-6968-3098, Minford, Anthony Patrick Leslie ORCID: https://orcid.org/0000-0003-2499-935X and Naraidoo, Ruthira 2008. Vicious and virtuous circles - The political economy of unemployment in interwar UK and USA. European Journal of Political Economy 24 (3) , pp. 605-614. 10.1016/j.ejpoleco.2008.04.005

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Abstract

This paper develops a political economy model of multiple unemployment equilibria to provide a theory of an endogenous natural rate of unemployment for the UK and the US interwar period. The theory here sees the natural rate and the associated path of unemployment as a reaction to mainly demand shocks and the institutional structure of the economy. The channel through which these two forces feed on each other is a political economy process whereby voters with limited information on the natural rate react to shocks by demanding more or less social protection. The reduced form results confirm a pattern of unemployment behaviour in which unemployment moves between high and low equilibria in response to shocks.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	D History General and Old World > D History (General) > D204 Modern History D History General and Old World > DA Great Britain E History America > E151 United States (General) H Social Sciences > H Social Sciences (General) H Social Sciences > HB Economic Theory H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HM Sociology J Political Science > JA Political science (General)
Uncontrolled Keywords:	Equilibrium unemployment ; Political economy ; Vicious and virtuous circles ; Bootstrapping ; Forecasting
Publisher:	Elsevier
ISSN:	0176-2680
Last Modified:	19 Oct 2022 09:49
URI:	https://orca.cardiff.ac.uk/id/eprint/22279

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