Discussion Paper

No. 2007-41 | September 03, 2007
Ciaran Driver and Stephen G. Hall
Production Constraints and the NAIRU

Abstract

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

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

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

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

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

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

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

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