Pub Date : 2026-03-01Epub Date: 2026-01-10DOI: 10.1016/j.rie.2026.101113
Benhur Ruqsana
The primary objective of this paper is to explore strategic behaviour in public goods allocation models under incomplete information with an exogenously given network. In order to do so, a game-theoretical framework is developed by incorporating beliefs about an uncertain state of the world. The equilibrium behaviour of individuals in public goods allocation is then characterized, with a particular focus on how the network structure and belief distribution influence these outcomes. Additionally, the impact of free-riding behaviour on welfare is examined, highlighting the role of network topology in determining efficiency. Finally, to ensure robustness, the model is tested under varying conditions.
{"title":"Public goods in a network: A Bayesian approach","authors":"Benhur Ruqsana","doi":"10.1016/j.rie.2026.101113","DOIUrl":"10.1016/j.rie.2026.101113","url":null,"abstract":"<div><div>The primary objective of this paper is to explore strategic behaviour in public goods allocation models under incomplete information with an exogenously given network. In order to do so, a game-theoretical framework is developed by incorporating beliefs about an uncertain state of the world. The equilibrium behaviour of individuals in public goods allocation is then characterized, with a particular focus on how the network structure and belief distribution influence these outcomes. Additionally, the impact of free-riding behaviour on welfare is examined, highlighting the role of network topology in determining efficiency. Finally, to ensure robustness, the model is tested under varying conditions.</div></div>","PeriodicalId":46094,"journal":{"name":"Research in Economics","volume":"80 1","pages":"Article 101113"},"PeriodicalIF":1.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145977124","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-01-11DOI: 10.1016/j.rie.2026.101114
Chen Qi
This article analyzes the impact of carbon emission trading policies on China's role in global resource allocation, with an emphasis on two-way foreign direct investment (FDI). The analysis used a difference-in-differences (DID) methodology to assess the effects of carbon emission trading on outward foreign direct investment (OFDI) and inward foreign direct investment (IFDI), utilizing panel data from 28 provinces spanning 2006 to 2020. The results indicate a fundamental reorientation of investment patterns, revealing that carbon trading significantly enhances OFDI while limiting IFDI. Regional variability is evident: increased OFDI benefits central provinces, while diminished IFDI and elevated compliance costs result in reduced investment in the western region. Upgrading promotes the increase of OFDI, whereas rationalization diminishes IFDI inflows, illustrating the moderating effect of industrial structure. These results indicate that the carbon price serves several functions, including environmental regulation, facilitating economic transformation, and wealth transfer. The study's findings can assist policymakers in China and beyond in aligning environmental objectives with economic competitiveness by offering new empirical data linking carbon markets to foreign investment flows.
{"title":"Carbon emissions trading and global resource allocation: Evidence from China’s two-way FDI","authors":"Chen Qi","doi":"10.1016/j.rie.2026.101114","DOIUrl":"10.1016/j.rie.2026.101114","url":null,"abstract":"<div><div>This article analyzes the impact of carbon emission trading policies on China's role in global resource allocation, with an emphasis on two-way foreign direct investment (FDI). The analysis used a difference-in-differences (DID) methodology to assess the effects of carbon emission trading on outward foreign direct investment (OFDI) and inward foreign direct investment (IFDI), utilizing panel data from 28 provinces spanning 2006 to 2020. The results indicate a fundamental reorientation of investment patterns, revealing that carbon trading significantly enhances OFDI while limiting IFDI. Regional variability is evident: increased OFDI benefits central provinces, while diminished IFDI and elevated compliance costs result in reduced investment in the western region. Upgrading promotes the increase of OFDI, whereas rationalization diminishes IFDI inflows, illustrating the moderating effect of industrial structure. These results indicate that the carbon price serves several functions, including environmental regulation, facilitating economic transformation, and wealth transfer. The study's findings can assist policymakers in China and beyond in aligning environmental objectives with economic competitiveness by offering new empirical data linking carbon markets to foreign investment flows.</div></div>","PeriodicalId":46094,"journal":{"name":"Research in Economics","volume":"80 1","pages":"Article 101114"},"PeriodicalIF":1.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147394629","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Online purchase decisions are becoming more complicated and are impacted by subconscious cognitive and emotional processes as a result of the rapid rise of e-commerce. These underlying elements are frequently missed by traditional marketing research, underscoring the necessity of a neuromarketing-based strategy. Through the integration of EEG, eye-tracking, and galvanic skin response (GSR) measurements with behavioral surveys, this research seeks to decipher digital consumer behavior by examining the effects of online stimuli, including visual design, website layout, and interactive elements, on emotional arousal, satisfaction, trust, attention, and purchase intention. To gather survey and neuromarketing data, 50–100 participants interacted with e-commerce platforms as part of a mixed-method research approach. To find patterns and connections between physiological reactions, visual attention, and behavioral outcomes, quantitative analysis was done using correlation, descriptive statistics, predictive modeling, and regression modeling. F1-score, precision, accuracy, and recall were used to assess the efficiency of machine learning techniques, such as Support Vector Machines and Random Forest, which were used to forecast purchase behavior based on a combination of neuromarketing and survey variables. The findings show the influence of visual and emotional signals on consumer engagement and insight into the unconscious factors that influence online purchase decisions. Results indicate that neuromarketing metrics provide a robust predictive method for comprehending digital customer behavior when paired with behavioral data. By matching the online experience with the emotional and cognitive behaviors of customers, this research helps designers create user-centered e-commerce interfaces and evidence-based digital marketing tactics that maximize trust, engagement, and conversion rates.
{"title":"Neuro marketing perspective on online purchase decision making for decoding the digital consumer","authors":"Namita Chawla , Nilesh Anute , Kunal Patil , Amol Ranadive , Ganesh Pathak , Mahesh Uday Mangaonkar","doi":"10.1016/j.rie.2026.101111","DOIUrl":"10.1016/j.rie.2026.101111","url":null,"abstract":"<div><div>Online purchase decisions are becoming more complicated and are impacted by subconscious cognitive and emotional processes as a result of the rapid rise of e-commerce. These underlying elements are frequently missed by traditional marketing research, underscoring the necessity of a neuromarketing-based strategy. Through the integration of EEG, eye-tracking, and galvanic skin response (GSR) measurements with behavioral surveys, this research seeks to decipher digital consumer behavior by examining the effects of online stimuli, including visual design, website layout, and interactive elements, on emotional arousal, satisfaction, trust, attention, and purchase intention. To gather survey and neuromarketing data, 50–100 participants interacted with e-commerce platforms as part of a mixed-method research approach. To find patterns and connections between physiological reactions, visual attention, and behavioral outcomes, quantitative analysis was done using correlation, descriptive statistics, predictive modeling, and regression modeling. F1-score, precision, accuracy, and recall were used to assess the efficiency of machine learning techniques, such as Support Vector Machines and Random Forest, which were used to forecast purchase behavior based on a combination of neuromarketing and survey variables. The findings show the influence of visual and emotional signals on consumer engagement and insight into the unconscious factors that influence online purchase decisions. Results indicate that neuromarketing metrics provide a robust predictive method for comprehending digital customer behavior when paired with behavioral data. By matching the online experience with the emotional and cognitive behaviors of customers, this research helps designers create user-centered e-commerce interfaces and evidence-based digital marketing tactics that maximize trust, engagement, and conversion rates.</div></div>","PeriodicalId":46094,"journal":{"name":"Research in Economics","volume":"80 1","pages":"Article 101111"},"PeriodicalIF":1.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146077243","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2025-11-17DOI: 10.1016/j.rie.2025.101102
Juan Ignacio Martín-Legendre, Pablo Castellanos-García, José Manuel Sánchez-Santos
Different views on inequality and preferences in income redistribution are instrumental in shaping tax-and-transfers redistributive policies. While the Median Voter Theorem indicates that increasing inequality should lead to an expansion of redistributive policies, the vast differences between countries in this regard seem to reveal this as a much more issue. In order to explore it further, we examine trends in the World Values Survey, which provides a heterogeneous sample of 88 countries for the period 1990–2018. Applying estimation methods for panel data, our results point to each country economic development –measured as per capita income– and perceived rather than actual inequality, as well as cultural factors associated with a country's geographical region, as the main determinants to explain redistribution preferences.
{"title":"Inequality and redistributive preferences: Comparative analysis with panel data from the World Values Survey (1990–2018)","authors":"Juan Ignacio Martín-Legendre, Pablo Castellanos-García, José Manuel Sánchez-Santos","doi":"10.1016/j.rie.2025.101102","DOIUrl":"10.1016/j.rie.2025.101102","url":null,"abstract":"<div><div>Different views on inequality and preferences in income redistribution are instrumental in shaping tax-and-transfers redistributive policies. While the Median Voter Theorem indicates that increasing inequality should lead to an expansion of redistributive policies, the vast differences between countries in this regard seem to reveal this as a much more issue. In order to explore it further, we examine trends in the World Values Survey, which provides a heterogeneous sample of 88 countries for the period 1990–2018. Applying estimation methods for panel data, our results point to each country economic development –measured as per capita income– and perceived rather than actual inequality, as well as cultural factors associated with a country's geographical region, as the main determinants to explain redistribution preferences.</div></div>","PeriodicalId":46094,"journal":{"name":"Research in Economics","volume":"80 1","pages":"Article 101102"},"PeriodicalIF":1.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145580445","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-01-10DOI: 10.1016/j.rie.2026.101112
Uchechukwu Jarrett , Sujata Saha
We investigate the growth effects of practices that either emphasize or de-emphasize the accumulation of imported capital goods compared to domestically produced capital goods. We find that an increased reliance on imported capital goods yielded lower aggregate growth, when compared to complementing practices where neither capital good source is prioritized and practices that increased reliance on domestic capital goods. Further investigation reveals a preference for complementing practices over a reliance on domestic capital goods only in low-income countries but the superiority of an increased reliance on domestic capital goods prevails everywhere else.
{"title":"Trading capital goods: Is it better to prioritize domestic capital goods production?","authors":"Uchechukwu Jarrett , Sujata Saha","doi":"10.1016/j.rie.2026.101112","DOIUrl":"10.1016/j.rie.2026.101112","url":null,"abstract":"<div><div>We investigate the growth effects of practices that either emphasize or de-emphasize the accumulation of imported capital goods compared to domestically produced capital goods. We find that an increased reliance on imported capital goods yielded lower aggregate growth, when compared to complementing practices where neither capital good source is prioritized and practices that increased reliance on domestic capital goods. Further investigation reveals a preference for complementing practices over a reliance on domestic capital goods only in low-income countries but the superiority of an increased reliance on domestic capital goods prevails everywhere else.</div></div>","PeriodicalId":46094,"journal":{"name":"Research in Economics","volume":"80 1","pages":"Article 101112"},"PeriodicalIF":1.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145977123","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-01Epub Date: 2025-11-05DOI: 10.1016/j.rie.2025.101101
María Jesús Delgado Rodríguez, Alfredo Cabezas Ares, Fernando Pinto Hernández
Non-communicable diseases (NCDs) are the leading cause of morbidity and mortality in Spain, imposing a significant economic burden through healthcare expenditures and productivity losses. Despite existing national strategies, a gap persists between public health knowledge and enacted policy, particularly concerning harm reduction, which is inconsistently applied across risk factors such as tobacco use, diet, and alcohol consumption. This study provides the first integrated quantitative assessment of the systematic application of harm reduction strategies across these areas in Spain. This analysis applies the Preventable Risk Integrated ModEl (PRIME) model, a comparative risk-assessment framework, parameterized with nationally representative Spanish data from the Global Burden of Disease study, health surveys, and dietary research- which were adjusted for underreporting biases. Counterfactual scenarios were developed by modelling the replacement of alcohol, conventional tobacco, and foods high in salt and saturated fat with existing, commercially available lower-risk alternatives. Our analysis estimates that the adoption of these harm reduction strategies could prevent approximately 1.23 million NCD cases annually. The projected economic gains total €18.32 billion, including €10.19 billion in direct healthcare expenditures and €8.13 billion from productivity gains. Tobacco-related risk reduction is associated with the greatest impact, preventing an estimated 0.53 million cases and yielding €5.59 billion in economic savings, followed by salt reduction at €4.10 billion. These findings offer novel empirical evidence that a pragmatic and consistent application of harm reduction, particularly in tobacco control, where it is currently resisted, could provide considerable health and economic benefits for Spain.
{"title":"Spain’s growing NCD burden: Can harm-reduction strategies turn the tide?","authors":"María Jesús Delgado Rodríguez, Alfredo Cabezas Ares, Fernando Pinto Hernández","doi":"10.1016/j.rie.2025.101101","DOIUrl":"10.1016/j.rie.2025.101101","url":null,"abstract":"<div><div>Non-communicable diseases (NCDs) are the leading cause of morbidity and mortality in Spain, imposing a significant economic burden through healthcare expenditures and productivity losses. Despite existing national strategies, a gap persists between public health knowledge and enacted policy, particularly concerning harm reduction, which is inconsistently applied across risk factors such as tobacco use, diet, and alcohol consumption. This study provides the first integrated quantitative assessment of the systematic application of harm reduction strategies across these areas in Spain. This analysis applies the Preventable Risk Integrated ModEl (PRIME) model, a comparative risk-assessment framework, parameterized with nationally representative Spanish data from the Global Burden of Disease study, health surveys, and dietary research- which were adjusted for underreporting biases. Counterfactual scenarios were developed by modelling the replacement of alcohol, conventional tobacco, and foods high in salt and saturated fat with existing, commercially available lower-risk alternatives. Our analysis estimates that the adoption of these harm reduction strategies could prevent approximately 1.23 million NCD cases annually. The projected economic gains total €18.32 billion, including €10.19 billion in direct healthcare expenditures and €8.13 billion from productivity gains. Tobacco-related risk reduction is associated with the greatest impact, preventing an estimated 0.53 million cases and yielding €5.59 billion in economic savings, followed by salt reduction at €4.10 billion. These findings offer novel empirical evidence that a pragmatic and consistent application of harm reduction, particularly in tobacco control, where it is currently resisted, could provide considerable health and economic benefits for Spain.</div></div>","PeriodicalId":46094,"journal":{"name":"Research in Economics","volume":"79 4","pages":"Article 101101"},"PeriodicalIF":1.3,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145519417","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-01Epub Date: 2025-10-20DOI: 10.1016/j.rie.2025.101095
Klaus Kultti , Teemu Pekkarinen
We study the price competition between two firms that have to advertise to reach buyers. We show that differences in advertising strategies can result in price-increasing competition. Advertising can be either informative or persuasive; the former informs buyers about the price of the standard good, and the latter increases buyers’ willingness to pay of the branded good. We show that when firms engage in different advertising methods, the pricing is in pure strategies, and if branding is effective, the firm using persuasive advertising asks a price that is higher than the monopoly price of the branded good (and, a fortiori, higher than the monopoly price of the standard good).
{"title":"Price-increasing competition by heterogeneous marketing strategies","authors":"Klaus Kultti , Teemu Pekkarinen","doi":"10.1016/j.rie.2025.101095","DOIUrl":"10.1016/j.rie.2025.101095","url":null,"abstract":"<div><div>We study the price competition between two firms that have to advertise to reach buyers. We show that differences in advertising strategies can result in price-increasing competition. Advertising can be either informative or persuasive; the former informs buyers about the price of the standard good, and the latter increases buyers’ willingness to pay of the branded good. We show that when firms engage in different advertising methods, the pricing is in pure strategies, and if branding is effective, the firm using persuasive advertising asks a price that is higher than the monopoly price of the branded good (and, a fortiori, higher than the monopoly price of the standard good).</div></div>","PeriodicalId":46094,"journal":{"name":"Research in Economics","volume":"79 4","pages":"Article 101095"},"PeriodicalIF":1.3,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145415605","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-01Epub Date: 2025-09-02DOI: 10.1016/j.rie.2025.101084
Joan E. Madia
The United Kingdom aims to be smoke-free by 2030, and in pursuit of this goal, has proposed a Generational Sales Ban (GSB). While somewhat innovative, the GSB exclusively targets future generations, potentially overlooking the immediate health burdens and illicit market risks associated with current smokers. This study argues for a Cap-and-Levy scheme as a more comprehensive and efficient alternative. By directly addressing supply, consumption, and state tax revenues, a Cap-and-Levy approach offers a broader impact on smoking prevalence including existing smokers, while potentially mitigating the unintended consequences of a sales ban, such as fuelling the illicit trade and reducing tax revenues. This analysis suggests that a Cap-and-Levy mechanism warrants consideration as a policy instrument that could outperform the GSB in achieving significant and immediate reductions in smoking-related harm, without the unintended consequences that the GSB would produce.
{"title":"Rethinking tobacco policy: Why a Cap-and-Levy scheme can outperform the UK’s sales ban","authors":"Joan E. Madia","doi":"10.1016/j.rie.2025.101084","DOIUrl":"10.1016/j.rie.2025.101084","url":null,"abstract":"<div><div>The United Kingdom aims to be smoke-free by 2030, and in pursuit of this goal, has proposed a Generational Sales Ban (GSB). While somewhat innovative, the GSB exclusively targets future generations, potentially overlooking the immediate health burdens and illicit market risks associated with current smokers. This study argues for a Cap-and-Levy scheme as a more comprehensive and efficient alternative. By directly addressing supply, consumption, and state tax revenues, a Cap-and-Levy approach offers a broader impact on smoking prevalence including existing smokers, while potentially mitigating the unintended consequences of a sales ban, such as fuelling the illicit trade and reducing tax revenues. This analysis suggests that a Cap-and-Levy mechanism warrants consideration as a policy instrument that could outperform the GSB in achieving significant and immediate reductions in smoking-related harm, without the unintended consequences that the GSB would produce.</div></div>","PeriodicalId":46094,"journal":{"name":"Research in Economics","volume":"79 4","pages":"Article 101084"},"PeriodicalIF":1.3,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145048382","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-01Epub Date: 2025-07-18DOI: 10.1016/j.rie.2025.101078
Maitrayee Das , Biswajit Mandal
This paper develops a theoretical framework to examine trade dynamics across four sectors: services, manufacturing, importable goods and the informal sector. The model investigates the role of distance in shaping trade patterns, outputs, and factor prices, highlighting the key differences between goods and services trade, particularly their sensitivity to distance related marketing cost. The model presents the possibility of ‘Dutch disease’ in the informal sector. Distinguishing between goods and services in terms of marketing and transport costs, the model reveals how resources—especially skilled labour—are allocated between service and manufacturing sectors. Furthermore, it outlines two scenarios for the informal sector, independent and integrated with manufacturing, in exploring how these configurations affect trade and production. Moreover, the empirical results corroborate findings obtained in the theoretical model and deepen our understanding of the complex interactions between time zone and trade.
{"title":"Distance related time zone difference, waiting time, trade, and Dutch disease","authors":"Maitrayee Das , Biswajit Mandal","doi":"10.1016/j.rie.2025.101078","DOIUrl":"10.1016/j.rie.2025.101078","url":null,"abstract":"<div><div>This paper develops a theoretical framework to examine trade dynamics across four sectors: services, manufacturing, importable goods and the informal sector. The model investigates the role of distance in shaping trade patterns, outputs, and factor prices, highlighting the key differences between goods and services trade, particularly their sensitivity to distance related marketing cost. The model presents the possibility of ‘Dutch disease’ in the informal sector. Distinguishing between goods and services in terms of marketing and transport costs, the model reveals how resources—especially skilled labour—are allocated between service and manufacturing sectors. Furthermore, it outlines two scenarios for the informal sector, independent and integrated with manufacturing, in exploring how these configurations affect trade and production. Moreover, the empirical results corroborate findings obtained in the theoretical model and deepen our understanding of the complex interactions between time zone and trade.</div></div>","PeriodicalId":46094,"journal":{"name":"Research in Economics","volume":"79 4","pages":"Article 101078"},"PeriodicalIF":1.3,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144779342","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-12-01Epub Date: 2025-09-17DOI: 10.1016/j.rie.2025.101092
Robert E. Hall , Marianna Kudlyak
We propose that the natural rate of unemployment may have an active role in the business cycle, in contrast to a widespread view that the rate is fairly smooth and at most only weakly cyclical. We demonstrate that the tendency to treat the natural rate as near-constant would explain the surprisingly low slope of the Phillips curve. We observe that evidence is weak about this basic point—the evidence neither comes close to rejecting the conventional view nor does it reject a very different view in which fluctuations in the natural rate are associated with a substantial fraction of cyclical volatility. We show that the natural rate may have closely tracked the actual rate during the long recovery that began in 2009 and ended in 2019. We explain how the common finding of research in the Phillips-curve framework of low — often extremely low — response of inflation to unemployment could be the result of fairly close tracking of the natural rate and the actual rate in recoveries. Our interpretation of the data contrasts to that of many Phillips-curve studies, that conclude that inflation has little relation to unemployment.
{"title":"The active role of the natural rate of unemployment","authors":"Robert E. Hall , Marianna Kudlyak","doi":"10.1016/j.rie.2025.101092","DOIUrl":"10.1016/j.rie.2025.101092","url":null,"abstract":"<div><div>We propose that the natural rate of unemployment may have an active role in the business cycle, in contrast to a widespread view that the rate is fairly smooth and at most only weakly cyclical. We demonstrate that the tendency to treat the natural rate as near-constant would explain the surprisingly low slope of the Phillips curve. We observe that evidence is weak about this basic point—the evidence neither comes close to rejecting the conventional view nor does it reject a very different view in which fluctuations in the natural rate are associated with a substantial fraction of cyclical volatility. We show that the natural rate may have closely tracked the actual rate during the long recovery that began in 2009 and ended in 2019. We explain how the common finding of research in the Phillips-curve framework of low — often extremely low — response of inflation to unemployment could be the result of fairly close tracking of the natural rate and the actual rate in recoveries. Our interpretation of the data contrasts to that of many Phillips-curve studies, that conclude that inflation has little relation to unemployment.</div></div>","PeriodicalId":46094,"journal":{"name":"Research in Economics","volume":"79 4","pages":"Article 101092"},"PeriodicalIF":1.3,"publicationDate":"2025-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145094591","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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