Measuring the NAIRU — A Structural VAR Approach

Measuring the NAIRU — A Structural VAR Approach This paper calculates the NAIRU for the US in a framework that allows inflation and unemployment to be jointly endogenous. We define the NAIRU as being the component of actual unemployment that is uncorrelated with inflation in the long run. We use a structural VAR to estimate the NAIRU and core inflation simultaneously and with greater precision than most of the previous literature. Our results show that the NAIRU fell dramatically at the end of the 1990s from 6.7% before 1997 to 5.2% afterwards. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Frontiers of Economics in China Brill

Measuring the NAIRU — A Structural VAR Approach

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Publisher
Brill
Copyright
Copyright 2011 by Koninklijke Brill NV, Leiden, The Netherlands
ISSN
1673-3444
eISSN
1673-3568
D.O.I.
10.1007/s11459-011-0123-7
Publisher site
See Article on Publisher Site

Abstract

This paper calculates the NAIRU for the US in a framework that allows inflation and unemployment to be jointly endogenous. We define the NAIRU as being the component of actual unemployment that is uncorrelated with inflation in the long run. We use a structural VAR to estimate the NAIRU and core inflation simultaneously and with greater precision than most of the previous literature. Our results show that the NAIRU fell dramatically at the end of the 1990s from 6.7% before 1997 to 5.2% afterwards.

Journal

Frontiers of Economics in ChinaBrill

Published: Jan 1, 2011

Keywords: NAIRU; inflation; unemployment; VAR

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