The NAIRU, Unemployment and Monetary Policy

Doug Staiger, James Stock and Mark Watson

Journal of Economic Perspectives, 1997, vol. 11, issue 1, 33-49

Abstract: This paper examines the precision of conventional estimates of the NAIRU and the role of the NAIRU and unemployment in forecasting inflation. The authors find that, although there is a clear empirical Phillips relation, the NAIRU is imprecisely estimated, forecasts of inflation are insensitive to the NAIRU, and there are other leading indicators of inflation that are at least as good as unemployment. This suggests deemphasizing the NAIRU in public discourse about monetary policy and instead drawing on a richer variety of leading indicators of inflation.

JEL-codes: E24 E31 E52 (search for similar items in EconPapers)
Date: 1997
Note: DOI: 10.1257/jep.11.1.33
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Citations: View citations in EconPapers (350)

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