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Measuring the US NAIRU as a step function

Author

Listed:
  • Hiroshi Yamada

    (Hiroshima University)

  • Gawon Yoon

    (Kookmin University)

Abstract

This paper reestimates the time-varying nonaccelerating inflation rate of unemployment (NAIRU) in the US. By assuming the NAIRU is a step function, not a smooth function, we show that a simple empirical model provides evidence supporting the consensus among macroeconomists that the US NAIRU was constant at about 6.0 % from the 1980s to the mid-1990s and then fell sharply below 6.0 % in the late 1990s.

Suggested Citation

  • Hiroshi Yamada & Gawon Yoon, 2016. "Measuring the US NAIRU as a step function," Empirical Economics, Springer, vol. 51(4), pages 1679-1688, December.
    • Handle: RePEc:spr:empeco:v:51:y:2016:i:4:d:10.1007_s00181-015-1048-2
    DOI: 10.1007/s00181-015-1048-2
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    References listed on IDEAS

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    More about this item

    Keywords

    NAIRU; Step function; Change point; $$ell _{1}$$ ℓ 1 -Norm penalized least squares;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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