The Financial Crisis

Joblessness and Investmentlessness

Bibliographic Data

ID8246770
AuthorsGylfi Zoega (0000-0002-7293-4596, University of Iceland, corresponding author)
Year2010
Volume5
Issue2
Publication date2010-01-26
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueCapitalism and Society (JOURNAL)
Journal identifiersISSN: 1932-0213 • E-ISSN: 2194-6140
PublisherWalter de Gruyter GmbH (PUBLISHER • DE)
DOI10.2202/1932-0213.1075
OpenAlexW2040115737
LanguageEN
Citations received2
References cited2

Financial crises follow a pattern that consists of changes in asset prices, real exchange rates, investment and employment. One noteworthy feature of this pattern is the jobless recoveries that often follow such crises. This was the experience of Finland and Sweden in the aftermath of their financial crises in the early 1990s and currently appears to be the case in the United States and many other countries. The behavior of unemployment during the crises mirrors that of investment, which is consistent with models of the natural rate of unemployment that make labor demand depend on investment in physical capital, new workers and customers. The implication is that the natural rate of unemployment falls during the investment boom that precedes a crisis and rises in its aftermath.Comments on this paper can be found at: http://ssrn.com/abstract=2209130

Asset (computer security · Boom · Capital (architecture · Economics · Exchange rate · Financial crisis · Financial market · Full employment · Geography · Investment (military · Labour economics · Macroeconomics · Monetary economics · Natural rate of unemployment · Political science · Unemployment · Unemployment rate · Economic Theory and Policy · Labor market dynamics and wage inequality · Monetary Policy and Economic Impact · Finance

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