Increasing NAIRU in Colombia may lead to rising unemployment levels.
The article explores how uncertain estimates of the Non Accelerating Rate of Unemployment (NAIRU) are in Colombia. By analyzing different NAIRU estimates and testing their constancy, the researchers found that the NAIRU has increased by about 4 percentage points over time. This means that policies aimed at reducing inflation may lead to higher levels of unemployment, as the NAIRU component of unemployment does not respond to monetary policy.