Long-Run Shifts of the Beveridge Curve and the Frictional Unemployment Rate in Australia

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Abstract

This paper examines the Beveridge Curve, the relationship between theunemployment and vacancy rates. Both variables are found to be non-stationaryand not co-integrated which implies that the Beveridge Curve has been shiftedover time by at least one non-stationary variable. We examine a number ofshiftvariables which have been used in previous empirical work and find a number ofco-integrating relationships one ofwhich we identify as the Beveridge Curve. It isused (a) as a basis for the decomposition ofchanges in the unemployment rate overthe sample perwd and (b) to compute the Structural unemployment rate by settingthe vacancy rate at the level at which output is at its potential.
Original languageEnglish
Pages (from-to)65-82
JournalAustralian Journal of Labour Economics
Volume6
Issue number1
Publication statusPublished - 2003

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