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Equilibrium unemployment theory Christopher A. Pissarides
Publisher: MIT

Prior_approval April 29, 2013 at 10:21 am. Equilibrium Unemployment Theory. Is theory going to supply an answer here? Speech delivered August 17 in Marquette, MI. What Is the New Normal Unemployment Rate? It's one thing to explain the current equilibrium, it's another to tell us how to get back to a better one. Recent labor markets developments, including mismatches in the skills of workers and jobs, extended unemployment benefits, and very high rates of long- term joblessness, may be impeding the return to "normal" unemployment rates of around 5%. Note that the terms “involuntary unemployment” and to be to distinguish one category from the other? I argue that the unemployment rate returns to a level that depends on wealth and, just as there are many equilibrium unemployment rates, so there are many equilibrium values for the prices of assets. Of course this analogy points to just one possible factor, it is hardly a comprehensive account of current unemployment, even if you ignore any possible problems in the story. This text, written with the graduate student in mind, analyzes the aggregate demand and aggregate supply for the open economy both in the short-term and in the long-term.