Theoretical and Applied Economics
No. 2 / 2011 (555)
The Natural Rate of Unemployment and its Implications for Economic Policy
Bucharest Academy of Economic Studies
Claudia PAICU
Bucharest Academy of Economic Studies
Silvia IACOB
Bucharest Academy of Economic Studies
Abstract. The analysis of the inflation-unemployment tradeoff has undergone several stages during the post-war era. The first was marked by the acceptance of A.W. Phillips’ 1957 hypothesis and the subsequent Phillips curve. The next stage – marked by Friedman’s contributions – revealed a vertical long-run Phillips curve and introduced the natural rate of unemployment, designating that level of unemployment consistent with stable inflation. This paper explores the theoretical and empirical implications that have emerged since the introduction of the natural rate concept. At the theoretical level, we find that, far from questioning its existence, the theoretical debates revolve around two main questions: Can we actually determine the precise level of the natural rate and what are the appropriate techniques? and How does the natural rate change over time and what are the factors that influence it? Empirical knowledge, on the other hand, lags behind. Despite numerous empirical studies, economists are a long way from an appropriate quantitative understanding of the determinants and variability of the natural rate, either across time or across countries.
Contents
Economics of Sustainable Development. Competitiveness and Economic Growth
The Particularities of the Economic Crisis in the Knowledge-Based Society
Adverse Selection Models with Three States of Nature
Sustaining an Effective ABC-ABM System
Consequences of the Budget Deficit in the Current Crisis in Romania. Implications on the Labor Market
Portfolio Risk Analysis using ARCH and GARCH Models in the Context of the Global Financial Crisis
Costs of Adopting a Common European Currency. Analysis in Terms of the Optimum Currency Areas Theory
The Effects of Economic Geography on Education in Romania
Statistical – Econometric Analysis of the Correlations between the Social Security Budget and the Main Macroeconomic Aggregates in Romania
Effects of the Current Economic Crisis on the Fiscal Variables in EU Countries
The Image of the Tourism Destination – a Supporting Element in the Development of the Regional Tourism Brand Study Case: Muntenia
Economic Crises and the Complexity of Animal Spirits Modeling
An Epistemological Perspective on the Quality of Life Concept
The Natural Rate of Unemployment and its Implications for Economic Policy
Estimation of Inflationary Expectations and the Effectiveness of Inflation Targeting Strategy
The Impact of Investments and Gross Value Added upon Earnings