Study: Economic Policy Uncertainty Leads to Higher Unemployment

By Ray Pinard | August 15, 2013

Here’s an interesting article by Sean Hackbarth, published on the FreeEnterprise.com website:

New research from the Federal Reserve Bank of San Francisco indicates that economic policy uncertainty has made unemployment worse. Sylvain Leduc, vice president and Zheng Liu, research advisor in the Economic Research Department write:

Our results suggests that, in late 2012, if there had been no policy uncertainty shocks, the unemployment rate would have been close to 6.5% instead of the reported 7.8%.

Leduc and Liu explain, “[E]ven though the number of job openings in the economy has been rising during the recovery, the unemployment rate has remained stubbornly high…. There are now more jobless workers for a given number of job openings than in the decade before the downturn.” The relationship between job openings and unemployment is represented by the Beveridge curve which shifted outward.

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Originally published July 2013. Reprinted by permission, freeenterprise.com, July 2013.
Copyright©2013, U.S. Chamber of Commerce.

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