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The NAIRU, Unemployment and Monetary Policy

1997; American Economic Association; Volume: 11; Issue: 1 Linguagem: Inglês

10.1257/jep.11.1.33

1944-7965

Douglas O. Staiger, James H. Stock, Mark W. Watson,

Monetary Policy and Economic Impact

This paper examines the precision of conventional estimates of the NAIRU and the role of the NAIRU and unemployment in forecasting inflation. The authors find that, although there is a clear empirical Phillips relation, the NAIRU is imprecisely estimated, forecasts of inflation are insensitive to the NAIRU, and there are other leading indicators of inflation that are at least as good as unemployment. This suggests deemphasizing the NAIRU in public discourse about monetary policy and instead drawing on a richer variety of leading indicators of inflation.