Cyclical Unemployment Sectoral Shifts Or Aggregate Disturbances
Cyclical Unemployment Sectoral Shifts Or Aggregate Disturbances
Katharine G Abraham
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This model seems to have motivated the empirical analysis in Lilien (1982a). 3. Figure 1 was drawn assuming that InY - InY follows a sine wave path. It was also assumed that the time period required for InY - InY to move through a complete cycle, the amplitude of the cycle, and the values of T, T yt Yi. And y o were such that Ir, - r^l always exceeds I (y, -Y 2^^^-^°^«. ~ dlnY *) I • This makes o a monotonically decreasing function of dlnY - dlnY . If |(y^-Y2)(dlnYj. - dlnY j. *) I exceeded Ir^...^ - r2l at any point during the upturn, a would decrease to zero, Increase a bit, fall back to zero, then finally increase again as the economy moved from trough to peak. However, there would have to be larger differences between the cyclical responsiveness of the two sectors and/or larger fluctuations of GNP around trend over shorter time periods than seems reasonable for this to happen. Even if this flip-flopping pattern did emerge, a and dU would still be positively correlated. 4. We present results based on values of U^ with a linear trend removed both here and elsewhere, since we are concerned with explaining short term fluctuations in unemployment, independent of trend movements in the level of unemployment.
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