Might there be a role for government policies—other than monetary policy—to systematically affect the unemployment rate? Robert Shimer, our colleague in the University of Chicago’s economics department, says that the research of this year’s Nobel Laureates in economics filled an important gap by shedding light on this crucial, and now especially timely, question.
We asked professor Shimer if he would explain for our readers how the research of this year’s Laureates has improved understanding of search frictions and unemployment. In the following summary—in which we think he is too modest in describing his own contribution to this literature—he neatly highlights the threads that connect research on search frictions, and ties the resulting insights to debate over the current high levels of unemployment.
