Non-Accelerating Inflation Rate Of Unemployment
A Non-Accelerating Inflation Rate Of Unemployment is a level of unemployment below which inflation rises.
- AKA: NAIRU.
- Context:
- It can (often) be used for representing an equilibrium between the state of the economy and the labor market.
- See: Monetary Policy, Inflation, Unemployment, Natural Rate of Unemployment.
References
2015
- (Wikipedia, 2015) ⇒ http://en.wikipedia.org/wiki/NAIRU Retrieved:2015-5-2.
- NAIRU is an acronym for non-accelerating inflation rate of unemployment, and refers to a level of unemployment below which inflation rises. It was first introduced as NIRU (non-inflationary rate of unemployment) in Modigliani–Papademos (1975), as an improvement over the "natural rate" of unemployment concept, [1] which was proposed earlier by Milton Friedman.
Monetary policy conducted under the assumption of a NAIRU involves allowing just enough unemployment in the economy to prevent inflation rising above a given target figure. Prices are allowed to increase gradually and some unemployment is tolerated.
- NAIRU is an acronym for non-accelerating inflation rate of unemployment, and refers to a level of unemployment below which inflation rises. It was first introduced as NIRU (non-inflationary rate of unemployment) in Modigliani–Papademos (1975), as an improvement over the "natural rate" of unemployment concept, [1] which was proposed earlier by Milton Friedman.
2014
- http://www.investopedia.com/terms/n/non-accelerating-rate-unemployment.asp
- QUOTE: 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”.
For 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. Critics cite that it is unlikely to have a static rate of unemployment that will last for long periods of time, because different levels of factors affecting the workforce and employers (such as the presence of unions and monopolies) can quickly shift this equilibrium.
- QUOTE: 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”.