Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/31581
Authors: 
Perez-Soba Aguilar, Ines
Marquez de la Cruz, Elena
Martinez-Canete, Ana Rosa
Palacio-Vera, Alfonso
Year of Publication: 
2006
Series/Report no.: 
Working papers // The Levy Economics Institute 475
Abstract: 
This paper examines the proposition that capital stock relative to aggregate output has been an important variable in the determination of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) over the last four decades. The authors present new empirical evidence that lends strong support to the claim that the aggregate capital-output ratio, the real price of imports, and aggregate capacity utilization were determinants of the NAIRU during the period. The same evidence also shows that technical progress and changes in long-term unemployment did not affect the NAIRU. We believe this evidence suggests that, insofar as the aggregate capital-output ratio is affected by changes in real interest rates, the stance of monetary policy is one determinant of the NAIRU.
Subjects: 
Capital-output ratio : cointegrated VAR model
NAIRU
capacity utilization
JEL: 
E22
E24
C32
Document Type: 
Working Paper

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