Can productivity growth explain the NAIRU? Long-run evidence from Britain, 1871-1999

    Research output: Contribution to journalArticle

    Abstract

    This paper investigates the effect of productivity growth on the non-accelerating inflation rate of unemployment (NAIRU) over the long run, using historically consistent time series for the UK from 1871 to 1999. A two-equation model of unemployment and wage-setting that incorporates productivity effects is estimated over the whole period, allowing for shifts associated with changes in labour market institutions. The results indicate that faster productivity growth reduces the NAIRU, but that this goes only part of the way towards explaining wide swings in average unemployment across the decades.
    Original languageEnglish
    Pages (from-to)475-91
    JournalEconomica
    Volume74
    Issue number295
    DOIs
    Publication statusPublished - 2007

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