Calculate the average spell of unemployment

Assignment Help Macroeconomics

Reference no: EM131478817

Question: a. Fill in two more rows of the table using the same approach as for the first two rows.

b. Notice that the fraction of workers finding a job each year (column 2) has the formula

Fraction finding job = 1/3 . (2/3)^year-1

Using this formula, fill in six more values for the fraction of workers finding a job (column 2), up to year 10.

c. To calculate the average spell of unemployment, we take the fraction of workers finding jobs (column 2), multiply it by the years of unemployment (column 1), and add up the result over all the rows. By adding up over 10 rows, calculate what the average spell of unemployment is. What do you expect to get when adding up over 20 rows?

d. Compare your answer to (c) with the average three-year spell of unemployment on page 186. Was that number accurate?

Reference no: EM131478817

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