Discussion Paper

No. 2007-41 | September 03, 2007
Production Constraints and the NAIRU


This paper argues that the production constraints in the basic NAIRU model should be distinguished by type: capital constraints and labour constraints. It notes the failure to incorporate this phenomenon in standard macro models. Using panel data for UK manufacturing over eighty quarters it is shown that capital constraints became relatively more important during the 1980s as industry failed to match the increase in labour flexibility with rising capital investment.

JEL Classification:

C23, D24, E22, E24


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Cite As

Ciaran Driver and Stephen G. Hall (2007). Production Constraints and the NAIRU. Economics Discussion Papers, No 2007-41, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2007-41

Comments and Questions

Anonymous - Referee Report
October 12, 2007 - 11:43

see attached file

Anonymous - Referee Report
October 12, 2007 - 11:44

see attached file

Anonymous - Associate Editor´s Decision
October 12, 2007 - 15:56

see attached file

Ciaran Driver, Stephen G. Hall - Revised Version
March 07, 2008 - 13:55

see attached file

Anonymous - Referee Report
March 07, 2008 - 13:58

see attached file