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The Natural Rate of Unemployment and the NAIRU: Theoretical Foundations, Empirical Evidence, and Policy Debates

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  • Vîntu, Denis

Abstract

This paper explores the concepts of the natural rate of unemployment and the non-accelerating inflation rate of unemployment (NAIRU). It discusses their theoretical foundations, empirical estimation, and policy implications. While both concepts have been central to macroeconomic theory and policymaking, they remain controversial. The analysis draws on historical developments, empirical evidence, and contemporary debates to evaluate the relevance of these concepts in modern economies.

Suggested Citation

  • Vîntu, Denis, 2025. "The Natural Rate of Unemployment and the NAIRU: Theoretical Foundations, Empirical Evidence, and Policy Debates," MPRA Paper 125939, University Library of Munich, Germany, revised Aug 2025.
    • Handle: RePEc:pra:mprapa:125939
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    References listed on IDEAS

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    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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