This study analyses the reasons why the prevalance hysteresis in the Australian unemployment rate causes the … unemployment rate to deviate from the natural rate during the study period 1966-1991. A simultaneous equation model is specified to … illustrate the channels that generate hysteresis in the unemployment rate. Thw model is validated using log differenced labour …

This study examines the paradoxical coexistence of high unemployment rates and real wage flexibility during the period … the prevalence of unemployment. However, both paradigms agree that the divergence of the unemployment rate for the natural … rate is a short-run phenomenon and in the long-run the unemployment reverts the natural rate. The New Keynesians and Neo …