IDEAS home Printed from https://ideas.repec.org/a/taf/apeclt/v9y2002i11p753-757.html
   My bibliography  Save this article

When all are NAIRU: hysteresis and behavioural inertia

Author

Listed:
  • T. D. Stanley

Abstract

Smyh and Easaw (2001) use a fully flexible ratchet model to estimate the US NAIRU. However, such flexible notions of NAIRU cleanse the natural rate hypothesis of all policy and theoretical relevance. Six successive years of unemployment rates below these estimated NAIRUs produce declining inflation, not the accelerating inflation promised by the natural rate hypothesis. An alternative model of inflation dynamics, the behavioural inertia hypothesis, is offered and shown to fit the US inflation-unemployment relation quite well. This behavioural inertia model is consistent with the recent US experience of low and falling unemployment accompanied by low and falling rates of inflation.

Suggested Citation

  • T. D. Stanley, 2002. "When all are NAIRU: hysteresis and behavioural inertia," Applied Economics Letters, Taylor & Francis Journals, vol. 9(11), pages 753-757.
    • Handle: RePEc:taf:apeclt:v:9:y:2002:i:11:p:753-757
    DOI: 10.1080/13504850210128785
    as

    Download full text from publisher

    File URL: http://www.informaworld.com/openurl?genre=article&doi=10.1080/13504850210128785&magic=repec&7C&7C8674ECAB8BB840C6AD35DC6213A474B5
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13504850210128785?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Cross,Rod Preface by-Name:Blanchard,Olivier (ed.), 1995. "The Natural Rate of Unemployment," Cambridge Books, Cambridge University Press, number 9780521483308, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. T.D. Stanley, 2013. "Does economics add up? An introduction to meta-regression analysis," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 10(2), pages 207-220.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ronald Schettkat & Rongrong Sun, 2009. "Monetary policy and European unemployment," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 25(1), pages 94-108, Spring.
    2. repec:hal:spmain:info:hdl:2441/5l6uh8ogmqildh09h561p0po1 is not listed on IDEAS
    3. Mario Amendola & Jean-Luc Gaffard & Francesco Saraceno, 2004. "Technological Shocks and the Conduct of Monetary Policy," Revue économique, Presses de Sciences-Po, vol. 55(6), pages 1241-1263.
    4. Nakatani, Takeshi & Skott, Peter, 2007. "Japanese growth and stagnation: A Keynesian perspective," Structural Change and Economic Dynamics, Elsevier, vol. 18(3), pages 306-332, September.
    5. Amitava Krishna Dutt & Peter Skott, 2006. "Keynesian Theory and the AD-AS Framework: A Reconsideration," Contributions to Economic Analysis, in: Quantitative and Empirical Analysis of Nonlinear Dynamic Macromodels, pages 149-172, Emerald Group Publishing Limited.
    6. repec:spo:wpmain:info:hdl:2441/6120 is not listed on IDEAS
    7. repec:hal:wpspec:info:hdl:2441/2005 is not listed on IDEAS
    8. Lucas Papademos, 2005. "Macroeconomic theory and monetary policy: the contributions of Franco Modigliani and the ongoing debate," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 58(233-234), pages 187-214.
    9. Ronald Schettkat & Rongrong Sun, 2009. "Nicht zu früh bremsen! - Der Einfluss der Geldpolitik auf die langfristige Wirtschaftsentwicklung in Deutschland und den USA-," Schumpeter Discussion Papers sdp09003, Universitätsbibliothek Wuppertal, University Library.
    10. Bozani, Vasiliki & Drydakis, Nick, 2011. "Studying the NAIRU and its Implications," IZA Discussion Papers 6079, Institute of Labor Economics (IZA).
    11. Magnus Gustavsson & Pär Österholm, 2010. "The presence of unemployment hysteresis in the OECD: what can we learn from out-of-sample forecasts?," Empirical Economics, Springer, vol. 38(3), pages 779-792, June.
    12. Michel De Vroey, 1997. "Le concept de chômage involontaire : de Keynes aux nouveaux keynésiens," Revue Économique, Programme National Persée, vol. 48(6), pages 1381-1408.
    13. Escañuela Romana, Ignacio, 2016. "Azar, Determinismo e Indecidibilidad en la Teoría del Ciclo Económico [Randomness, Determinism and Undecidability in the Business Cycle Theory]," MPRA Paper 72978, University Library of Munich, Germany.
    14. Jorge Andrés Tamayo, 2008. "La tasa natural de desempleo en Colombia y sus determinantes," Borradores de Economia 491, Banco de la Republica de Colombia.
    15. Robert M. Coen, 1999. "The NAIRU and Wages in Local Labor Markets," American Economic Review, American Economic Association, vol. 89(2), pages 52-57, May.
    16. Dany Lang & Christian de Peretti, 2009. "A strong hysteretic model of Okun's Law: theory and a preliminary investigation," International Review of Applied Economics, Taylor & Francis Journals, vol. 23(4), pages 445-462.
    17. Aurélien Gaimon & Vincent Lapegue & Paola Veroni & Noé N'Semi & Frédéric Reynés & Maël Theulière, 2007. "Does the interaction between shocks and institutions solve the OECD unemployment puzzle ? A theoretical and empirical appraisal," Working Papers hal-03602950, HAL.
    18. Sujit Kapadia, 2003. "The Capital Stock and Equilibrium Unemployment: A New Theoretical Perspective," Economics Series Working Papers 181, University of Oxford, Department of Economics.
    19. Luis Alberiko Gil-Alana & Zeynel Abidin Ozdemir & Aysit Tansel, 2019. "Long Memory in Turkish Unemployment Rates," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(1), pages 201-217, January.
    20. Andong Zhu & Robert Pollin, 2005. "Inflation and Economic Growth: A Cross-Country Non-linear Analysis," Working Papers wp109, Political Economy Research Institute, University of Massachusetts at Amherst.
    21. repec:hal:wpspec:info:hdl:2441/6120 is not listed on IDEAS
    22. Raurich, Xavier & Sala, Hector & Sorolla, Valeri, 2006. "Unemployment, Growth, And Fiscal Policy: New Insights On The Hysteresis Hypothesis," Macroeconomic Dynamics, Cambridge University Press, vol. 10(3), pages 285-316, June.
    23. Ines Perez-Soba Aguilar & Elena Marquez de la Cruz & Ana Rosa Martinez-Canete & Alfonso Palacio-Vera, 2006. "Capital Stock and Unemployment: Searching for the Missing Link," Economics Working Paper Archive wp_475, Levy Economics Institute.
    24. Caplin, Andrew & Leahy, John, 2000. "Mass layoffs and unemployment," Journal of Monetary Economics, Elsevier, vol. 46(1), pages 121-142, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:9:y:2002:i:11:p:753-757. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEL20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.