Summary of The Natural Rate of Unemployment over the Past 100 Years

Looking for the report?
We have the summary! Get the key insights in just 5 minutes.

The Natural Rate of Unemployment over the Past 100 Years summary
Start getting smarter:
or see our plans

Rating

7 Overall

7 Importance

8 Innovation

7 Style


Recommendation

Economists are now studying whether the US economy has reached its natural rate of unemployment, or “u-star,” signaling the equilibrium of price and output in the long run. An unemployment rate below u-star may signal an overheating economy, while joblessness at a level higher than u-star could suggest labor market weakness. Researchers Regis Barnichon and Christian Matthes offer a robust alternative for estimating u-star, which currently points to a tightening labor market. getAbstract suggests this esoteric study to economists and analysts.

In this summary, you will learn

  • What the natural rate of unemployment represents,
  • How economists can measure it and
  • What a new estimation model calculates as the natural rate.
 

About the Authors

Regis Barnichon is a research adviser at the Federal Reserve Bank of San Francisco, and Christian Matthes is a senior economist at the Federal Reserve Bank of Richmond.

 

Summary

The concept of the natural rate of unemployment, “u-star,” is central to determining the health of the US labor market. U-star indicates the expected jobless rate when an economy’s prices are stable and its production is at a solid and sustainable pace for the long run. The statistic guides central bankers on how best to achieve their dual mandate of price stability and maximum employment. Calculating u-star, however, is problematic, because it is an approximation rather than a data point that experts can measure directly.


More on this topic

Customers who read this summary also read

Measuring Interest Rate Risk in the Very Long Term
Measuring Interest Rate Risk in the Very Long Term
8
Racial Gaps in Labor Market Outcomes in the Last Four Decades and over the Business Cycle
Racial Gaps in Labor Market Outcomes in the Last Four Decades and over the Business Cycle
8
The Economic Outlook and the Conduct of Monetary Policy
The Economic Outlook and the Conduct of Monetary Policy
8
The Importance of Strong Labor Demand
The Importance of Strong Labor Demand
8
An Early Experiment with “Permazero”
An Early Experiment with “Permazero”
7
Monetary Policy’s Role in Fostering Sustainable Growth
Monetary Policy’s Role in Fostering Sustainable Growth
9

Related Channels

Comment on this summary