This paper studies the connection between the stock market and the unemployment rate. I establish three facts. First …, the log of the real value of the S&P 500 and the log of a logistic transformation of the unemployment rate are non …-stationary cointegrated series. Second, the stock market Granger causes the unemployment rate. Third, the connection between changes in the …

This paper develops a rational expectations model with multiple equilibrium unemployment rates where the price of … a permanent reduction in wealth and consumption and a permanent increase in the unemployment rate. My work suggests that …