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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NAIRU: Non-Accelerating Inflation Rate of Unemployment
5 percent - lower than current estimates of the rate considered to be consistent with maintaining stable prices (the non-accelerating inflation rate of unemployment, or NAIRU).
This can in turn reduce wage pressure and reduce the non-accelerating inflation rate of unemployment, explaining both the high rates of return on capital and the low degree of labour market pressure.
The current state of the inflation-unemployment tradeoff is often summarized in a statistic called the NAIRU, an ugly acronym that stands for the non-accelerating inflation rate of unemployment.
The function for estimating the non-accelerating inflation rate of unemployment (NAIRU) has been incorrectly formulated.

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