@techreport{NBERw14818, title = "Hysteresis in Unemployment: Old and New Evidence", author = "Laurence M. Ball", institution = "National Bureau of Economic Research", type = "Working Paper", series = "Working Paper Series", number = "14818", year = "2009", month = "March", doi = {10.3386/w14818}, URL = "http://www.nber.org/papers/w14818", abstract = {This paper argues that hysteresis helps explain the long-run behavior of unemployment. The natural rate of unemployment is influenced by the path of actual unemployment, and hence by shifts in aggregate demand. I review past evidence for hysteresis effects and present new evidence for 20 developed countries. A central finding is that large increases in the natural rate are associated with disinflations, and large decreases with run-ups in inflation. These facts are consistent with hysteresis theories and inconsistent with theories in which the natural rate is independent of aggregate demand.}, }