natural rate of unemployment (1 Viewer)

[!meeee!]

does anyone know what the natural rate of unemployment is?
all i have is that it was 6% for 1999.
what is it for 2002?

 

[:XerO:]

According To ABC Online It's Currently Considered To Be Around 5%

 

[!meeee!]

thanks!
good luck for tomorrow

 

[:XerO:]

Same Dude.

 

[Alex]

You can work it out, there is an equation, i forget it.............

 

[Alex]

oh crap sorry I meant the NAIRU which is



= 5%

+

(unemployment rate - 5%)
----------------------------------
2

 

[Bambul]

Just know that it is structural + frictional unemployment. I have previously said that I do not believe that the natural rate actually exists.

But you don't need to quantify it. Though halfway between 5% and the current unemployment rate (as mentioned above) is the easiest estimate to make.

 

[kaseita]

how longs the nairu theory been around for?

 

[Bambul]

I'm taking a guess, but I think it came about during the 60's/70's. Before that economies usually had full employment (eg. Australia's unemployment rate rarely went above 2%). But it was around this time that the baby boomers began entering the workforce and the dramatic increase in the size of the labour force caused unemployment to reach such a size that marcoeconomic policy alone could not effectively reduce unemployment enough. So my guess is that the NAIRU was developed at this point as an excuse by governments and as long as there is unemployment politicians will use it as their magic bullet!

 

[kaseita]

lol!
g'luck in your endeavour. trying to prove phillips wrong will take a bit

 

[Bambul]

Phillips curve is right (ie. short term relationship between unemployment and inflation). Natural rate is wrong, IMO it's just cyclical unemployment that can be eliminated with enough aggregate demand (you just need lots of it).