Economics, Econometrics and Finance
4 years ago

Global competition and tech advancements drive down unemployment rates dramatically.

1 view
The Journal of Economic Perspectives
The Time-Varying NAIRU and its Implications for Economic Policy
Robert J. Gordon

Paper Summary

The NAIRU, which is the unemployment rate that keeps inflation stable, changes over time. By analyzing past inflation rates and economic shocks, researchers found that the NAIRU for the GDP deflator has varied between 5.4% and 6.5% over the last forty years. The most recent estimate is 5.6%. Recent decreases in the NAIRU are due to factors like global competition, immigration, and lower prices for electronics.

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