Definition Non-Accelerating Inflation Rate Of Unemployment - NAIRU' The specific level of unemployment that exists in an economy that does not cause inflation to increase. The non-accelerating rate of unemployment (NAIRU) often represents an equilibrium between the state of the economy and the labor market. NAIRU is also sometimes referred as a "long-run Phillips curve"
Assumptions According to modern labour market literature NAIRU is defined as the rate of unemployment at which inflation stabilises in the absence of any wage-price surprises. Conventional thinking about the equilibrium unemployment rate assumes that in the long run NAIRU is determined solely y supply side factors of the labour market
ExampleFor example, suppose that the unemployment rate is at 5% and the inflation rate is 2%. Assuming that both of these values remain the same for a period of years, it can be said that when unemployment is under 5%, it is natural for an inflation rate of 2% to correspond with it.
Definition
Non-Accelerating Inflation Rate Of Unemployment - NAIRU'
The specific level of unemployment that exists in an economy that does not cause inflation to increase. The non-accelerating rate of unemployment (NAIRU) often represents an equilibrium between the state of the economy and the labor market. NAIRU is also sometimes referred as a "long-run Phillips curve"
Assumptions
According to modern labour market literature NAIRU is defined as the rate of unemployment at which inflation stabilises in the absence of any wage-price surprises. Conventional thinking about the equilibrium unemployment rate assumes that in the long run NAIRU is determined solely y supply side factors of the labour market
ExampleFor example, suppose that the unemployment rate is at 5% and the inflation rate is 2%. Assuming that both of these values remain the same for a period of years, it can be said that when unemployment is under 5%, it is natural for an inflation rate of 2% to correspond with it.