# Questions tagged [natural-rate-unemployment]

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### How to derive (mathematically and intuitively) the relationship between expected price level and natural rate of employment?

We know that $W = \mathbb{E}(P)f(u, z)$ , so that nominal wage $W / P = (\mathbb{E}(P) / P)f(u, z)$ From Blanchard. Furthermore, $W / P = 1/(1+m)$ (where m is defined as the markup on wages to ...
63 views

### Does productivity lessen the birth rate as Adam Smith claims?

‘That the demand for men, like that for any other commodity, necessarily regulates the production of men, quickens it when it goes on too slowly, and stops it when it advances too fast.’ (Adam Smith, ...
56 views

### Solution Check on Problem about expected inflation and Philips Curve relation (from Blanchard's Macroeconomics book)

Consider a country with two political parties, Democrats and Republicans. Democrats care more about unemployment than Republicans, and Republicans care more about inflation than Democrats. When ...
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1 vote
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### Separation rate & job finding rate

On page 494, when discussing the natural rate of unemployment Mankiw states that the NRU is caculated by dividing job separation/job separation + job finding. See below: "The NRU can be viewed as ...
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1 vote
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### How does using HP filter allows us to estimate long-run values for variables such as output and unemployement?

I'm reading the paper "Okun's Law: Fit at 50?" written by Laurence Ball, Daniel Leigh and Prakash Loungani. In it, in order to estimate Okun's Law in its level form, they use the HP filter ...
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440 views

### Calculating natural rate of unemployment

I have sample data on unemployment rate in a market and am looking to calculate the natural unemployment rate. The natural unemployment rate I obtained is constant over a time period, which is not a ...
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### Why Keynesians prefer short run measures despite straight long-run Phillips curve?

I was studying about the Monetarists' and Keynesians' view of the Phillips curve and natural rate theory of Friedman. It seems intuitive to me as to why Friedman argues that using an expansionary ...
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1 vote
25 views

### Explaining negative "cyclic" unemployment with a production function

First of all, here is a related post. Unfortunately, it does not answer my question. I have heard that there is an understanding of negative unemployment in economic theory. Obviously, absolute ...
1 vote
76 views

### What measure of unemployment is used by central banks to find out whether the rate of unemployment is below the natural rate of unemployment?

Having an unemployment rate below the natural rate of unemployment (NRU) leads to wage inflation and a reduction in productivity. Seeing the consequences of that, and knowing that one of the roles of ...
• 145
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### What are the determinants of the natural rate of interest and how market rate converges to it?

I'd like to know how is determined the natural/neutral rate of interest. Moreover, how the market rate can converge to it ? If you have some references it would be great !
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### Why is sovereign rate a reference?

I would like to know why we always focus on 10 years sovereign rates when we talk about interest rates ? Let me clarify. I'm reading a paper from the Bank of England that emphasizes the fact that ...
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1 vote
1k views

### Am I correct that cyclical unemployment can be negative?

Let's start with stating and emphasizing some truths that we will need later. Overall unemployment rate=Frictional unemployment + Structural unemployment + Cyclical unemployment. Also, Natural rate of ...
• 1,113
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### Why would overemployment mean that labor is used inefficiently?

If labor is being used efficiently, there is no excess unemployment or over employment. This phrase from Khan Academy struck me as quite strange. Why on Earth would over employment mean that labor ...
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1 vote
34 views

### How exactly does removing labor​ market rigidities reduce structural unemployment and increase potential output in an economy?

Here I want to focus primarily on the potential benefits of labor market reforms such as a reduction in job security and trade union power and not their controversies. I wish to learn a few thoroughly ...
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### question regarding econometric testing of the natural rate hypothesis

Hi All: I have the Lucas, 1972b paper "Econometric Testing Of the Natural Rate Hypothesis" but unfortunately not as a pdf. ( it's from a book that contains a lot of Lucas' papers called "studies in ...
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### Why is Canada's unemployment rate higher than that of the US, UK, Germany and the Netherlands?

Current unemployment rate in Canada is about 5.8% while countries such as the US, UK, Germany and the Netherlands have unemployment rates well below 5%. In addition, the current unemployment rate in ...
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104 views

### Why does a reduction in regional differences in unemployment shift the Phillips curve?

According to this question below, apparently a reduction in the regional differences in the level of unemployment would shift the short run Phillips curve SRPC leftwards. The answer to the question is ...
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### How to distinguish Full-time (FT) employment and Part-time (PT) employment when calculating employment rate?

Which of the following is true for the Canadian labour force data for June, 2015, for unemployment, Full-time (FT) employment, and Part-time (PT) employment? A) Unemployment fell because FT ...
• 145
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135 views

### AS-AD model and labor force increase and natural rate of unemployment

I am trying to analyze the effects on the unemployment rate $u$ as the labor force $L$ increases, by use of the AS-AD model. I have however some issues I can't wrap my head around: If we increase ...
6k views

### Is 'full employment' synonymous with 'the natural rate of unemployment'?

Is the phrase 'full employment' synonymous with the phrase 'the natural rate of unemployment'? Parkin, et al. (2010) seem to use these two terms interchangably in chapter 20, but looking up these two ...
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5k views

### Right definition of natural rate of unemployment?

Earlier I studied macroeconomics from Blanchard. But now while reading Mankiw's Macroeconomics I found different definition for natural rate of unemployment. According to Blanchard, "the rate of ...
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