Maximum employment: what we know (and don’t know) about the labor market

Sandra Pianalto

Annual Report, 2011

Abstract: Developing issues in the labor market are clouding the outlook for both the unemployment rate and the natural rate of unemployment over the next few years. Both rates at their current levels clearly argue for providing an accommodative monetary policy, as long as inflation remains consistent with the Federal Open Market Committee?s price stability objective. ; During the next few years, I expect that our economy will continue to grow, that unemployment will decline, and that inflation will average about 2 percent. Monetary policy will need to be adjusted in response to incoming data that may prompt economists to re-evaluate the outlook. In particular, I am closely watching developments in several highly uncertain features of the labor market. These include trends in job matching, unemployment durations, labor market participation, and wages.

Keywords: Labor market; Employment (search for similar items in EconPapers)
Date: 2011
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