Comments on: What’s happened to Nairu?

By: Philip Rothman

Philip Rothman — Wed, 30 Sep 2009 13:50:11 +0000

Possible increase in NAIRU and ‘problems for right-leaning economists and politicians.’ Huh? Is the NAIRU concept part of the ‘vast right-wing conspiracy’?

By: Mario

Mario — Wed, 30 Sep 2009 10:40:31 +0000

“First, lower labor mobility which, in part, is due to the poor state of the housing market where negative equity positions are hindering what has traditionally been a geographically flexible job hunting process.”

Interesting. I wonder to what magnitude health insurance tied to an employer affects this.

By: Anon.

Anon. — Wed, 30 Sep 2009 01:42:45 +0000

Given that inflation in recent years has been driven almost entirely by *oil prices*, which are driven much more by industry fundamentals than by employment or any other general economic feature these days, what does NAIRU have to do with it?

In fact inflation is barely relevant when our economy is so dependent on a single external price.

When we switch to a renewable-energy economy, you can start thinking about NAIRU.

By: skeptonomist

skeptonomist — Wed, 30 Sep 2009 01:23:56 +0000

And what exactly would be the dire consequences of inflation above the target rate? (more dire, that is, than the consequences of the Fed trying futilely to stop the inflation) Would it allow workers to get uppity?

By: Ken Houghton

Ken Houghton — Tue, 29 Sep 2009 21:36:19 +0000

7% as NAIRU, eh? I can still remember an old Isaac Asminov column from around the time Felix was born where he mentions overhearing businessmen talking about whether 5 or 6% was NAIRU.

Nice to see our economy has “evolved” so that there are excess people, especially with all those jobs that were, er, created by Comparative Advantage.

By: Basho

Basho — Tue, 29 Sep 2009 21:26:09 +0000

As someone who got his degree in economics this decade… I can only dream about this country having so easy a problem to fix as inflation due to low unemployment and robust wage growth.

In my lifetime I have seen (and expect to see) inflation coming from sources much more difficult to fix. Sources such as global supply and demand (commodities) and bad public policy (government and healthcare stand out). Not to mention that entities seem to be accumulating more and more market power (what this is due to is debatable).

By: b.

b. — Tue, 29 Sep 2009 20:27:24 +0000

This implies that inflation is driven by wages. Given that wages have essentially been flat for long periods now, it is reasonable to ask whether there are other causes for inflation – such as resource limitations (oil), expansion of the money supply (dollar), and the interaction between the two.

High rates of unemployment will persist for longer – by fiat, not as a consequence of decisions and actions by those in power, not because of redistribution of wealth that is neither reasonable nor decent, not because those that were unable or unwilling to gamble in the casino we call an economy are being burdened with the cost of the catastrophic failure of that pyramid scheme. It is worse than the weather – we cannot even conceive of a “climate change” on Wall Street.

That’s why unemployment will have to remain high – because anything else would require an actual change affecting not only those that are unemployed, but also those who never seem to pay for their greed-induced mistakes.

By: conservarue

conservarue — Tue, 29 Sep 2009 18:22:52 +0000

You see, if it wasn’t for the tech bubble, we wouldn’t have had to spend the surplus on deregulating wallstreet, which led to the collapse because democrats who were never in charge wanted to give mansions to ACORN. Or something.
Smoke a little crack, and it will start to make sense…

By: wait...what?

wait...what? — Tue, 29 Sep 2009 18:18:40 +0000

Really? People still believe in the NAIRU?

By: Noah Yetter

Noah Yetter — Tue, 29 Sep 2009 16:05:36 +0000

“…that’s going to raise problems for right-leaning economists and politicians, who are going to find it harder to extol the abilities of the free market to find employment for all…”

Since we don’t actually HAVE a free market, I don’t see how this is relevant. Now, if you meant to say that left-leaning economists and politicians will have problems extolling the abilities of third-way socialism to find employment for all, then you would have a point.

By: glory

glory — Tue, 29 Sep 2009 15:53:10 +0000

http://econospeak.blogspot.com/2009/09/w hy-capitalism-fails-and-minsky-punts.htm l – “have the government act as employer of last resort, guaranteeing a job to anyone who wanted one”

it _is_ part of the fed’s mandate afterall! (…and posner is on board ;) http://www.tnr.com/article/how-i-became- keynesian