Report
Patrick Artus

Where can we see hysteresis of unemployment or productivity since the 2008 crisis and why?

This is a very important question: if there has been hysteresis of unemployment and productivity since the crisis in a country (protracted rise in unemployment, lasting decline in productivity gains), the structural unemployment rate is higher and potential growth is lower, which means that economic policy must become restrictive earlier in the economic cycle than in the past. If there is currently hysteresis of unemployment and productivity for example in the euro zone, it should not continue to conduct an expansionary monetary policy since the unemployment rate has returned to the vicinity of the structural unemployment rate and growth is markedly higher than potential growth. Unemployment hysteresis may result from a loss of human capital caused by long-term unemployment after the crisis; hysteresis of productivity gains by a decline in corporate investment and by corporate defaults during the crisis, and therefore by a loss of productive capital. It seems that there is hysteresis of unemployment or the employment rate, among OECD countries in France, Italy, Spain and the United States; and hysteresis of productivity gains in the United States, the United Kingdom, Japan, France and Germany.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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