doubles when unemployment rises from 5% to 8%. Theoretically, such countercyclicality arises because of a nonlinearity, namely … in recessions but large in expansions. Hence, government consumption reduces unemployment much more in recessions than in …

This paper develops a theory characterizing the effects of fiscal policy on unemployment over the business cycle. The … theory is based on a model of equilibrium unemployment in which jobs are rationed in recessions. Fiscal policy in the form of … government spending on public-sector jobs reduces unemployment, especially during recessions: the fiscal multiplier …

, and price and wage rigidities. Regulation affects producer entry costs, employment protection, and unemployment benefits …

staggered nominal wage bargaining. We find that the estimated natural rate of unemployment is consistent with the NBER … description of the U.S. business cycle, and that the inflation/unemployment trade-off facing monetary policymakers is … unemployment gaps are more efficient than rules responding to output or unemployment growth rates, also in the presence of …

those that affect the long-run unemployment rate. …