Unemployment Rate Benchmarks

Richard Crump, Christopher Nekarda and Nicolas Petrosky-Nadeau

No 2020-072, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper discusses various concepts of unemployment rate benchmarks that are frequently used by policymakers for assessing the current state of the economy as it relates to the pursuit of both price stability and maximum employment. In particular, we propose two broad categories of unemployment rate benchmarks: (1) a longer-run unemployment rate expected to prevail after adjusting to business cycle shocks and (2) a stable-price unemployment rate tied to inflationary pressures. We describes how various existing measures used as benchmark rates fit within this taxonomy with the goal of facilitating the use of a common set of terms for assessments of the current state of the economy and deliberations among policymakers.

Keywords: Labor market; Monetary policy; Unemployment; Business cycles (search for similar items in EconPapers)
JEL-codes: E24 E32 J60 (search for similar items in EconPapers)
Pages: 19 p.
Date: 2020-08-27
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2020-72

DOI: 10.17016/FEDS.2020.072

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