natural rate of unemployment
- Define the natural rate of unemployment (also known as full employment unemployment or NAIRU-Non Accelerating inflation rate of unemployment).
- What is the difference between the unemployment rate and the natural rate of unemployment (NAIRU)?
- What is the current natural rate of unemployment? How did it change in the past 30 years? What kinds of factors affect the natural rate of unemployment? (see the cbo.gov website below for historical values)
- Considering that the current unemployment rate is 3.7% (June 2019), what kind of policies should the government and the Fed implement? (You can use the Keynesian or the Classical-Supply side approach) How do you compare your recommendation to the current government’s policies?
- Explain the current relationship between unemployment and inflation. Here is an article about the current situation: https://www.cnbc.com/2019/07/11/the-fed-chairman-says-the-relationship-between-inflation-and-unemployment-is-gone.html (Links to an external site.)
Here are some resources for you but feel free to do your own research and find more information on the internet. Please cite your references.
https://www.cbo.gov/about/products/budget-economic-data#6 (Links to an external site.) (Go to Potential GDP and underlying inputs at the bottom of the page and click on the most recent date. Go to ‘supp table 2’ tab)
http://www.federalreserve.gov/faqs/economy_14424.htm (Links to an external site.)
https://fred.stlouisfed.org/series/NROU (Links to an external site.)
https://www.frbsf.org/economic-research/publications/economic-letter/1998/september/the-natural-rate-nairu-and-monetary-policy/ (Links to an external site.)
https://www.thebalance.com/natural-rate-of-unemployment-definition-and-trends-3305950
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