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The Active Role of the Natural Rate of Unemployment during Cyclical Recoveries

Hall, Robert E.; Kudlyak, Marianna - National Bureau of Economic Research - 2023

We propose that the natural rate of unemployment has an active role in the business cycle, in contrast to the prevailing view that the rate is essentially constant. We demonstrate that this tendency to treat the natural rate as near-constant would explain the surprisingly low slope of the...

Persistent link: https://www.econbiz.de/10014436979

Why Inflation Rose and Fell : Policymakers' Beliefs and US Postwar Stabilization Policy

Primiceri, Giorgio - 2005

This paper provides an explanation for the run-up of U.S. inflation in the 1960s and 1970s and the sharp disinflation in the early 1980s, which standard macroeconomic models have difficulties in addressing. I present a model in which rational policymakers learn about the behavior of the economy...

Persistent link: https://www.econbiz.de/10012467538

The Phillips Curve is Alive and Well : Inflation and the NAIRU During the Slow Recovery

Gordon, Robert J. - 2013

the natural rate of unemployment (or NAIRU), and thus the Fed is steering the economy in a fog with no navigational device … or less) than of long-run unemployment. The implied NAIRU for the total unemployment rate has risen since 2007 from 4 …

Persistent link: https://www.econbiz.de/10012459271

The Natural Rate Hypothesis : An idea past its sell-by date

Farmer, Roger E.A. - 2013

Central banks throughout the world predict inflation with new-Keynesian models where, after a shock, the unemployment rate returns to its so called "natural rate'. That assumption is called the Natural Rate Hypothesis (NRH). This paper reviews a body of work, published over the last decade,...

Persistent link: https://www.econbiz.de/10012459393

Monetary Policy Mistakes and the Evolution of Inflation Expectations

Orphanides, Athanasios - 2011

What monetary policy framework, if adopted by the Federal Reserve, would have avoided the Great Inflation of the 1960s and 1970s? We use counterfactual simulations of an estimated model of the U.S. economy to evaluate alternative monetary policy strategies. We show that policies constructed...

Persistent link: https://www.econbiz.de/10012461579

Hysteresis in Unemployment : Old and New Evidence

Ball, Laurence M. - 2009

This paper argues that hysteresis helps explain the long-run behavior of unemployment. The natural rate of unemployment is influenced by the path of actual unemployment, and hence by shifts in aggregate demand. I review past evidence for hysteresis effects and present new evidence for 20...

Persistent link: https://www.econbiz.de/10012463829

The NAIRU in Theory and Practice

Ball, Laurence - 2002

This paper discusses the NAIRU -- the non-accelerating inflation rate of unemployment. It first considers the role of … the NAIRU concept in business cycle theory, arguing that this concept is implicit in any model in which monetary policy … influences both inflation and unemployment. The exact value of the NAIRU is hard to measure, however, in part because it changes …

Persistent link: https://www.econbiz.de/10012469774

The Fed and the New Economy

Ball, Laurence - 2002

down in the late 1990s. However, the Fed's behavior appears stable once one accounts for the falling NAIRU of the period. A … rule based on inflation and the deviation of unemployment from the NAIRU captures the Fed's behavior through the entire …

Persistent link: https://www.econbiz.de/10012469930

Sticky Information : A Model of Monetary Nonneutrality and Structural Slumps

Mankiw, N. Gregory - 2001

This paper explores a model of wage adjustment based on the assumption that information disseminates slowly throughout the population of wage setters. This informational frictional yields interesting and plausible dynamics for employment and inflation in response to exogenous movements in...

Persistent link: https://www.econbiz.de/10012470102

Prices, Wages and the U.S. NAIRU in the 1990s

Staiger, Douglas - 2001

Using quarterly macro data and annual state panel data, we examine various explanations of the low rate of price inflation, strong real wage growth, and low rate of unemployment in the U.S. economy during the late 1990s. Many of these explanations imply shifts in the coefficients of price and...

Persistent link: https://www.econbiz.de/10012470404