Stabilization Policy, Expected Output and Employment.
This paper investigates the relationship between stabilization policy and the cyclical behavior of employment. A policy regime that is less committed to maintaining a high level of real activity may induce a destabilizing response, causing rational employers to shed more labor during a recession. Th...
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| Format: | Journal article |
| Language: | English |
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Blackwell Publishing
1988
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| _version_ | 1826298401084407808 |
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| author | Bond, S |
| author_facet | Bond, S |
| author_sort | Bond, S |
| collection | OXFORD |
| description | This paper investigates the relationship between stabilization policy and the cyclical behavior of employment. A policy regime that is less committed to maintaining a high level of real activity may induce a destabilizing response, causing rational employers to shed more labor during a recession. This expectational effect increases the output costs of an anti-inflationary policy. This hypothesis is tested with reference to the Thatcher policy experiment. An econometric model of U.K. manufacturing employment, which incorporates forward-looking output expectations, is found to forecast the collapse of employment after 1979 tolerably well. Its failure when expected output is omitted suggests that this effect is quantitatively significant. |
| first_indexed | 2024-03-07T04:46:16Z |
| format | Journal article |
| id | oxford-uuid:d365916c-2707-44c5-a7b7-efe803081aba |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T04:46:16Z |
| publishDate | 1988 |
| publisher | Blackwell Publishing |
| record_format | dspace |
| spelling | oxford-uuid:d365916c-2707-44c5-a7b7-efe803081aba2022-03-27T08:10:52ZStabilization Policy, Expected Output and Employment.Journal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:d365916c-2707-44c5-a7b7-efe803081abaEnglishDepartment of Economics - ePrintsBlackwell Publishing1988Bond, SThis paper investigates the relationship between stabilization policy and the cyclical behavior of employment. A policy regime that is less committed to maintaining a high level of real activity may induce a destabilizing response, causing rational employers to shed more labor during a recession. This expectational effect increases the output costs of an anti-inflationary policy. This hypothesis is tested with reference to the Thatcher policy experiment. An econometric model of U.K. manufacturing employment, which incorporates forward-looking output expectations, is found to forecast the collapse of employment after 1979 tolerably well. Its failure when expected output is omitted suggests that this effect is quantitatively significant. |
| spellingShingle | Bond, S Stabilization Policy, Expected Output and Employment. |
| title | Stabilization Policy, Expected Output and Employment. |
| title_full | Stabilization Policy, Expected Output and Employment. |
| title_fullStr | Stabilization Policy, Expected Output and Employment. |
| title_full_unstemmed | Stabilization Policy, Expected Output and Employment. |
| title_short | Stabilization Policy, Expected Output and Employment. |
| title_sort | stabilization policy expected output and employment |
| work_keys_str_mv | AT bonds stabilizationpolicyexpectedoutputandemployment |