Unemployment Rate Dynamics and Persistent Unemployment Under Rational Expectations
Michael R. Darby, John C. Haltiwanger and Mark Plant
,
4
(
75
)
American Economic Review
614-637
September
1985
Abstract
This paper develops a model of unemployment rate dynamics that provides an explanation of persistent cyclical unemployment that does not involve persistent expectational errors or other nonoptimizing behavior. Our results are based on the interaction of search dynamics and inventory adjustments.
