Non-Accelerating Inflation Rate of Unemployment

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Non-Accelerating Inflation Rate of Unemployment

Also called NAIRU. The unemployment rate in an economy below which inflation will begin to rise. The idea behind NAIRU states that a certain unemployment rate is built in to an economy. If unemployment falls too far, the economy will begin to overheat and inflation will rise. This analysis is highly controversial; some economists hold full employment is possible without these negative side effects. Milton Friedman was a major proponent of the NAIRU idea. See also: Phillips curve.
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The introduction discusses the economic growth period with low unemployment and low inflation in the 1990s and its implications for the Non Accelerating Inflation Rate of Unemployment (NAIRU) doctrine.