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Topic: Differences between the Natural Rate of Unemployment and the NAIRU

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	NAIRU - Wikipedia, the free encyclopedia
		The term NAIRU is an acronym for Non-Accelerating Inflation Rate of Unemployment.
		The concept arose in the wake of the popularity of the Phillips curve which summarized the observed negative correlation between the rate of unemployment and the rate of inflation (measured as annual nominal wage growth of employees) for a number of industrialised countries with more or less mixed economies.
		Monetarists instead support the generalized assertion that the correct approach to unemployment is through microeconomic measures (to lower the NAIRU whatever its exact level), rather than macroeconomic activity based on an estimate of the NAIRU in relation to the actual level of unemployment.
	en.wikipedia.org /wiki/NAIRU (636 words)

	Unemployment Persistence Re (Site not responding. Last check: 2007-10-31)
		The authors' explanation of the medium-term movements of unemployment was that the trajectory of unemployment through time reflected the cumulation of labour-market 'impulses' and their associated streams of 'dynamic' responses, with each shock followed by a prolonged adjustment process.
		In the equilibrium case, with these simplifications, the unemployment rate jumped on to its equilibrium path and, in the future, the equilibrium rate was driven by the evolution of the private wealth of the representative worker.
		The NAIRU had remained more or less constant in the past ten years, in association with a reduction in union power and in the real interest rate, which was almost completely compensated for by the increase in the tax wedge.
	www.cepr.org /pubs/Bulletin/MEETS/4432.htm (4992 words)

	Revision Guru
		Unemployment falls to 6%, moving along SRPC I to point b where inflation is now 4% as people are basing their expectations of inflation on year 1.
		The Non Accelerating Inflation Rate of Unemployment is the level of unemployment at which inflationary pressures in the economy are stable.
		By the summer of 2000, unemployment in the UK had fallen to just 3.8% of the labour force (using the claimant count measure) whilst retail price inflation had remained comfortably within the government's target (2.5%) and wage inflation was under control.
	www.revisionguru.co.uk /economics/phillips.htm (1244 words)

	The Macroeconomic Roots of High European Unemployment: The Impact of Foreign Growth by Dean Baker and John Schmitt, ... (Site not responding. Last check: 2007-10-31)
		Since the impact of changes in unemployment rates on deficits has probably not been constant in most nations over the last three decades, accurate measures of the impact of changes in fiscal policy would require assessment of the impact of institutional changes that have altered the relationship between unemployment and deficits.
		We use the estimated relationship between GDP growth and the change in the unemployment rate in each country to estimate the change in unemployment that would occur in each country if overall GDP growth were zero in a particular year.
		This difference is the expected change in the unemployment rate given the gap between the actual rate of growth of each nation’s major trading partners and the level of foreign growth that would have been required to keep the unemployment rate from rising or falling.
	www.cepr.net /publications/eurounemploy.htm (7086 words)

	Model Properties - Tax and the Supply-Side
		In the HMT model the existence of the long-run wedge effect ensures a fall in the unemployment rate of 0.34 percentage points by the end of the tenth year, with a gradual decline continuing although it is not clear where the inflation rate is going to settle down.
		In the LBS model the unemployment rate is within 0.05 percentage points of its baseline values by this time and the model appears to be settling down at a stable equilibrium.
		Changing nominal interest rates in each period by the same amount as the change in the inflation rate is a fairly crude monetary policy rule which in this case is seen to fail to control inflation.
	faculty.insead.edu /fatas/ime/Virtual/model/info3-5.htm (810 words)

	EconEdLink \| EconomicsMinute \| A Case Study: The Unemployment Rate - February 2002
		The rapid increase in the unemployment rate from 3.9 to 5.8 over the past year, as well as the decrease in the number of people employed are the results of those changes in spending.
		The unemployment rate is the percentage of the U.S. labor force that is unemployed.
		Unemployment rates for states and cities are released with a greater lag than the national data.
	www.ncee.net /econedlink/lessons/index.cfm?lesson=EM300&page=teacher (2964 words)

	EconEdLink \| EconomicsMinute \| A Case Study: The Unemployment Rate - July 2003
		The unemployment rate for the month of June was 6.4 percent, an increase from the 6.1 percent in May. Total employment fell by 30,000 in June.
		The unemployment rate in June (6.4 percent) increased from the previous month’s rate of 6.1 percent.
		The increase in the unemployment rate from 3.9 percent to the current 6.4 percent, as well as the decrease in the number of people employed, are the results of those changes in spending.
	www.ncee.net /econedlink/lessons/index.cfm?lesson=EM485&page=teacher (2719 words)

	Our NAIRU Limit
		Unemployment would then be back at its natural rate and inflation would stop accelerating, but it would stay at its new, higher level until unemployment rose above the natural rate and the process was painfully reversed.
		In this view, the only way to reduce unemployment, except possibly in the short run, is to change conditions affecting the supply of labor for example, by cutting the minimum wage, reducing or eliminating unemployment benefits, or upgrading the skills of workers.
		The first is that, left to itself, any given rate of inflation is self-perpetuating; the second, that unemployment is a key factor in changing inflation rates specifically, that higher unemployment lowers inflation, and lower unemployment raises inflation.
	pages.stern.nyu.edu /~nroubini/articles/NairuEisner.htm (2509 words)

	The Inflation Acceleration Controversy
		It was the "natural rate hypothesis" introduced by Milton Friedman (1968) in his famous presidential address to the American Economic Association that would do the trick.
		With this natural rate hypothesis, Friedman (1968) and Phelps (1967) established that this was indeed the case.
		The reaction to Friedman 's natural rate hypothesis was manifold.
	cepa.newschool.edu /het/essays/monetarism/acceleration.htm (3976 words)

	CW Resource (Site not responding. Last check: 2007-10-31)
		Unemployment rates and inflation rates in European Union countries both have remained generally significantly higher than in the U.S. during the 1990s.
		Adherents to this perspective note that strong unions, high firing costs and generous unemployment benefits have made job markets clunky in EU countries, causing the natural rate of unemployment to be higher than it would be otherwise.
		Click to find the current unemployment rates for France, Germany, and the U.S. The Institute of International Relations (IIR) in Athens, Greece, was founded in 1989 by a group of international relations scholars to advance understanding of world issues in the areas of international politics, security, business and economics in eastern and southern Europe.
	myphlip.pearsoncmg.com /cw/mpviewie.cfm?vieid=1127&vbcid=5494 (777 words)

	Wage Rigidity Does It Explain Unemployment (Site not responding. Last check: 2007-10-31)
		Gordon's research shows that there is no cross-country correlation between the increases in unemployment and the increase in the manufacturing wage gap since the late 1960s.
		One might draw from this the pessimistic conclusion that the level of unemployment sufficient to maintain a stable rate of inflation has risen sharply, and that European economies are now operating at this level.
		Analysis of the data from these periods might suggest that the unemployment rate at which the economy can be operated at a stable rate of inflation - the NAIRU - was 15% in the US and 10% in the UK.
	www.cepr.org /PUBS/Bulletin/meets/308.htm (1721 words)

	Trev, NAIRU, Philips, Rational expectations
		He had to explain why occasionaly unemployment is different from the natural rate of unemployment.
		Government wants a trade of between inflation and employment, they want to be at A. But then people revise their expectation of 0-inflation and gradually build up inflationary expectations.
		The difference between this years expected inflation and last years expectation is a function of last years inflation minus what was expected last year.
	www.ieg.ee /keith/docs/MACRO/FRIEDUNE.htm (1150 words)

	Alan Greenspan and the ECB: Different Policies, Different Results, by Dean Baker, February 22, 2002 (Site not responding. Last check: 2007-10-31)
		By contrast, the unemployment rate in the euro zone appears to have bottomed out slightly above 8.0 percent, and is now on the rise, as Europe is being dragged down by the recession in the United States.
		The unemployment rate for African-Americans fell from 11.5 percent in 1994 to 7.6 percent in 2000.
		Given the weak empirical foundation for the link between labor market rigidities and unemployment, and the high cost borne by segments of society from weakening labor market protections, it is striking that weakening labor market protections would be so frequently advocated by economists as a remedy for high unemployment.
	www.cepr.net /publications/federal_reserve_2002_02.htm (3524 words)

	[No title]
		NAIRU, the non-accelerating inflation rate of unemployment, is the unemployment rate that occurs when there is no pressure for the inflation rate to increase.
		For all intents and purposes, we have used NAIRU and natural rate of unemployment as one in the same concept in looking at the long run Philips Curve.
		Recall that the natural rate of unemployment is basically frictional and structural employment.
	www.arts.cornell.edu /econ/wissink/econ102jpw/psets/aps6.doc (1290 words)

	The Short Run Weekly Issue 27
		The NAIRU (non-accelerating inflation rate of unemployment) is an abstraction that is useful to both central bankers and politicians.
		Those who have taken an introductory economics course have learned that there are different types of unemployment: structural, cyclical, and frictional unemployment (if you are confused by this, further reading on these types of unemployment can be found in the classroom section of theshortrun.com).
		This search unemployment is really a measure of those people without jobs, with their reason for not having a job being that they have not yet found a job that matches their skills with an employers needs.
	www.theshortrun.com /newsletter/archive/27.html (1070 words)

	[No title]
		Unemployment insurance is often available, or extended during periods of recession.
		Others suggest that unemployment is involuntary for the most part, because upon losing a job workers search for similar jobs as the one just lost.
		Occurs when the unemployed workers do not have the skills to take the jobs that are available.
	www.unlv.edu /faculty/waddoups/ECO365/lecturenotes/ch9.doc (286 words)

	Skeptico: More San Francisco stupidity
		The study shows that the gradual fall in the value of the minimum wage in the 20 year period is responsible for a 1.5% fall in the equilibrium rate of unemployment.
		In layman’s terms, the NAIRU is the rate of unemployment theoretically consistent with stable inflation.
		Your obvious mistake is that NAIRU is not "the equilibrium rate of unemployment".
	skeptico.blogs.com /skeptico/2005/11/more_san_franci.html (9994 words)

	Essay: What are the main differences between the 'natural rate of unemployment' and the 'NAIRU' hypotheses? - ...
		The main differences between the two concepts relate to the fact that they belong to different models; the Friedman's or the Neo-Classical model (the natural rate of unemployment) and the imperfect competition model developed by New Keynesian economists (NAIRU).
		The existence of the differences between the NAIRU and the natural rate of unemployment, hence, depends on the theoretical perspective.
		From the New Keynesian perspective, however, the equilibrium can settle at a level below the full employment; thus making the natural rate of unemployment a special case of NAIRU that occurs at full employment.
	www.coursework.info /University/Economics/What_are_the_main_differences_between_the_natural_rate_of_L72029.html (294 words)

	Economics essays. Unlimited access to Economics coursework. University and other UK qualifications - Coursework.info (Site not responding. Last check: 2007-10-31)
		To What Extent did the Gradual Abandonment of the Maoist Development Paradigm Between the years 1978 and 1988 Improve or...
		What are the main differences between the 'natural rate of unemployment' and the 'NAIRU' hypotheses?...
		What is the Significance of the Disagreement between Neo-Realists and Neo Liberals?...
	www.coursework.info /College_and_University/Economics_Essays_and_Coursework_C_43/more10.html (680 words)

	ECON 480 Review Questions for Exam 3
		Give some examples of compensating differences in wages in the U.S. Assuming preferences differ, how are compensating differences determined when jobs either have the characteristic (such as whether the job is on the night shift) or not?
		Explain how each is related to the unemployment rate, assuming a constant labor force.
		Compare the unemployment rate for different groups in the labor market.
	oregonstate.edu /~fraundom/review3480.html (1072 words)

	World Bank Search Results (Site not responding. Last check: 2007-10-31)
		NAIRU (the non-accelerating inflation rate of unemployment), that is the...
		Benchmark quarters are those when the actual unemployment rate is roughly
		or natural rate, or of the maximum growth of employment without...
	extsearch.worldbank.org /servlet/SiteSearchServlet?q=nairu (250 words)

	[No title]
		Empirically, there are important differences between the US and Europe with respect to both unemployment and income distribution, and the European experience fits badly within a traditional NAIRU framework.
		Gordon, R.J. (1997) "The Time-Varying NAIRU and its Implications for Economic Policy".
		Phelps, E.S. and Zoega, G. (1998) "Natural Rate Theory and OECD Unemployment".
	www.econ.au.dk /vip_htm/pskott/phd-fag-f99.htm (517 words)

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	NEP-LAB-2000-05-30
		"Unemployment Insurance and Subsequent Job Duration: Job Matching vs Unobserved Heterogeneity," IZA Discussion Papers 116, Institute for the Study of Labor (IZA).
		"natural rate of unemployment data," Instructional Stata datasets for econometrics nairu, Boston College Department of Economics.
		"Characteristics of Unemployment Dynamics: The Chain Reaction Approach," IZA Discussion Papers 127, Institute for the Study of Labor (IZA).
	ideas.repec.org /n/nep-lab/2000-05-30.html (860 words)

	ISB - International School Bangkok » High School » Subject Area Programs » Social Studies » ...
		Differences in the definitions of the two concepts
		Limitations of using GDP as a measure to compare welfare between countries
		Allowances for differences in purchasing power when comparing welfare between countries
	www.isb.ac.th /Section_3_Macroeconomics (133 words)

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