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HowToDo Question : What is the WS / PS (unemployment-economy) ?

A solution has been found What is the WS / PS (unemployment-economy) ?

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PostPosted: 01 Dec 2010 13:46 


The structural unemployment rate comes from the mismatch between supply and labor demand, an approach the equilibrium unemployment rate. It depends on the importance of the rigidities that hinder the smooth functioning of the labor market. There are two approaches to the equilibrium unemployment rate:

A conventional normative view, that of the natural rate of Milton Friedman. This is an unemployment rate of full employment, based solely on voluntary unemployment. It sétablit normally in an economy where the labor market operates without intervention of the state economic situation, it is all the greater as the labor market is more rigid.

A positive vision of the New Keynesian economy, the unemployment rate to balance WS-PS. As the natural rate of unemployment, it also reflects the rigidities that prevent real wage adjustment. However, he admits the existence of involuntary unemployment, moreover, it does not have the best of full employment as in Friedman. There are two applications of this concept of structural unemployment:

The NAIRU, which comes mainly from an empirical approach (we seeks to achieve an econometric estimation of structural unemployment).

Unemployment equilibrium model WS-PS which comes mainly from a theoretical approach (seeking to highlight the underlying factors in structural unemployment), but can nevertheless be estimated empirically. The hysteresis effect of unemployment takes this second approach.

My question is very simple. I can not understand precisely how the NAIRU and operate the WS-PS. Someone enlighten me to happen to synthetically?

Thank you. :)

PostPosted: 01 Dec 2010 15:20 
Good evening,
A good way is to read this: E8le -WS-PS.pdf

After it gets better! :-)

PostPosted: 01 Dec 2010 16:06 
I saw this page but I thought someone could give me a concise answers and synthetic that takes 3 lines
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