What’s the natural rate of unemployment? Answers from forecasters

Kevin Capehart

International Review of Applied Economics, 2019, vol. 33, issue 5, 712-732

Abstract: For its panel survey of professional macroeconomic forecasters, the US Federal Reserve asks panelists whether they use the ‘natural rate of unemployment’ (NRU) or ‘non-accelerating inflation rate of unemployment’ (NAIRU) in formulating their forecasts and, also, to estimate the NRU/NAIRU. This paper studies responses and non-responses to those questions in order to interrogate forecasters’ views of the NRU/NAIRU. We find that most panelists in most years say they do not use the NRU/NAIRU, and they do not provide an estimate of it. Among those who do, their NRU/NAIRU estimates differ but usually do not differ significantly from the average of recent unemployment rates. We fail to find much evidence – in either their inflation and unemployment forecasts, NRU/NAIRU estimates, or revisions to those estimates over time – that panelists who use the NRU/NAIRU treat it as an unemployment rate below which inflation rises and above which inflation falls. Finally, we find that the NRU/NAIRU has no informational value for panelists who say they use it; they are no better at accurately forecasting inflation or unemployment.

Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/02692171.2019.1566446 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:irapec:v:33:y:2019:i:5:p:712-732

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CIRA20

DOI: 10.1080/02692171.2019.1566446

Access Statistics for this article

International Review of Applied Economics is currently edited by Professor Malcolm Sawyer

More articles in International Review of Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().