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The Concept, Policy Use and Measurement of Structural Unemployment: Estimating a Time Varying NAIRU Across 21 OECD Countries

Author

Listed:
  • Pete Richardson
  • Laurence Boone
  • Claude Giorno
  • Mara Meacci
  • David Rae
  • David Turner

Abstract

The structural rate of unemployment and associated non-accelerating inflation rate of unemployment (the NAIRU) are of major importance to the analysis of macro and structural economic developments, although in practice these concepts are not well defined and there is considerable uncertainty and controversy concerning their measurement and policy use. The present paper reviews a range of conceptual and analytical issues and related empirical studies to examine the usefulness and limitations of such concepts. A reduced-form Phillips curve approach is found the most suitable conceptual framework for representing the NAIRU as currently used by the OECD in its policy analysis and surveillance work. Three distinct classes of NAIRU concept are identified, distinguished by the time-frame in which they are defined, which map directly into the broad requirements for macro and structural policy analysis. In line with a number of recent empirical studies, this general approach is applied ... Les concepts de taux de chômage structurel et NAIRU (non accelerating inflation rate of unemployment) jouent un rôle important pour l’analyse macro-économique et des développements structurels de l’économie, même si, en pratique, ces concepts ne sont pas définis précisément, leur estimation est entachée d’incertitude et leur utilisation pour la politique économique souvent controversée. Ce papier présente une revue des concepts, discussions analytiques et études empiriques liés au NAIRU, afin de définir l’utilité éventuelle de ces concepts et leurs limites. Dans le cadre d’analyse des politiques économiques et travaux de surveillance menés par l’OCDE, le concept de NAIRU dérivé d’une courbe de Phillips de forme réduite apparaît le plus utile. Trois notions de NAIRU peuvent être distinguées, suivant l’horizon temporel de référence, et qui peuvent être directement reliées à des cadres d’analyse de politique macro-économique et structurelle. Suivant les développements récents de la ...

Suggested Citation

  • Pete Richardson & Laurence Boone & Claude Giorno & Mara Meacci & David Rae & David Turner, 2000. "The Concept, Policy Use and Measurement of Structural Unemployment: Estimating a Time Varying NAIRU Across 21 OECD Countries," OECD Economics Department Working Papers 250, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:250-en
    DOI: 10.1787/785730283515
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    More about this item

    Keywords

    Kalman filter; NAIRU; OECD; Phillips curve; unemployment;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • 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
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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