Layard, Nickell & Jackman's Model of Unemployment

w - p^e = ₀ - ₁u
p - w^e = ₀

where u is the unemployment rate and subscript e is the expectation operator. When expectations are accurate, unemployment is given by

(0 + 0) / 1  (1 + 0) / 0  (0 + 1) / 0  none of the above    Next question Exit