Uncertainties surrounding natural rate estimates in the G7

R.B. Cross, J. Darby, J.M. Ireland, Reinhard Neck (Editor), Christian Richter (Editor), Peter Mooslechner (Editor)

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

It is four decades since Phelps (1967) and Friedman (1968) unveiled the natural rate of unemployment hypothesis, and the concept of an equilibrium rate of unemployment is central to the prevailing theories of labour market behaviour and the relationship between unemployment and inflation. Moreover, the natural rate and associated unemployment gaps are seen as important reference points, typically as part of a broad range of indicators, by policy makers who need to assess short-term inflation developments and/or consider appropriate decompositions of fiscal balances into their structural and cyclical components. Yet, as surveys and symposia have illustrated (Bean 1994, Cross 1995, Journal of Economic Perspectives 1997), there remains much uncertainty both about which factors do and do not determine equilibrium rates of unemployment, and about the corresponding numerical values.
Original languageEnglish
Title of host publicationQuantitative Economic Policy: Essays in Honour of Andrew Hughes Hallett
Place of PublicationBerlin, Germany
PublisherSpringer
Pages337-363
Number of pages26
Volume20
ISBN (Print)3540746838
DOIs
Publication statusPublished - 2007

Publication series

NameAdvances in Computational Economics
PublisherSpringer

Keywords

  • interest rates
  • economics
  • unemployment
  • inflation

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