We test the significance of nonlinearity in unemployment dynamics by determining the analytical conditions for the existence of stable steady states, bifurcations and deterministic chaos, to investigate the intrinsic origin of irregularity in unemployment fluctuations. Our model, based on Okun’s Law, permits deducing the role of labor market flexibility and labor productivity in the control of unemployment and provides policy suggestions. We empirically prove that uncontrollability of unemployment is sufficiently distant in most advanced economies. Nevertheless, using numerical experiments, we determine that there are countries in which unemployment evolves towards numerical disorder.
Instability and intrinsic disorder in unemployment dynamics: A nonlinear revision of Okun’s Law
Iacopo Odoardi;Donatella Furia
2023-01-01
Abstract
We test the significance of nonlinearity in unemployment dynamics by determining the analytical conditions for the existence of stable steady states, bifurcations and deterministic chaos, to investigate the intrinsic origin of irregularity in unemployment fluctuations. Our model, based on Okun’s Law, permits deducing the role of labor market flexibility and labor productivity in the control of unemployment and provides policy suggestions. We empirically prove that uncontrollability of unemployment is sufficiently distant in most advanced economies. Nevertheless, using numerical experiments, we determine that there are countries in which unemployment evolves towards numerical disorder.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
