Can cyclical unemployment ever be zero?
If so, then does unemployment have to be 0%?
If so, then does unemployment have to be 0%?
Aleconomixt
Favorite Answer
First you have to determine potential output from PPF and for that you mist know productivity, labor employed and capital used. Historical data could be available for K and L but to relate to A is difficult as there is no standard measure. Well, you can assume/know cumulative effect of automation and trained labor and better infrastructure like transport, banking, laws etc. and then can assert value of A.
Know what I am arriving at ? All these numbers we read are fake.
When government says they cannot reduce %U below 5% that being NAIRU , accept that.
Those theorists in universities ,after all, are fed by companies who always want some unemployment.
Anonymous
Yes, when business cycle is on the peak. But unemployment will not be zero, because seasonal, structural and frictional unemployment is still there.