In Mr Tulip's view, a good part of the difference between the low equilibrium rate of unemployment in America (and Britain) and the much higher rates in continental Europe can be attributed to Europe's higher minimum wages.

ECONOMIST: Economics focus

So strong is this indirect effect, on his calculations, that the gradual fall in the relative value of America's minimum wage over the past 20 years is capable of explaining 1.5 percentage points of the fall in the country's equilibrium rate of unemployment over the same period.

ECONOMIST: Economics focus

The macroeconomy has a long-run equilibrium natural rate of unemployment and GDP from which unanticipated counter-cyclical policy can scarcely nudge the economy.

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In particular, delaying doing anything has led to a continued do-nothing equilibrium for employers, whose hesitancy to hire in light of this uncertainty has kept unemployment growth tepid.

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