Tuesday, July 23, 2019

No Such Thing As The Natural Rate Of Unemployment

I know that the idea of a "natural rate" of unemployment or a non-accelerating inflation rate of unemployment (NAIRU) makes no sense. I cite, for example, James Galbraith's 1998 book, Created Unequal: The Crisis in American Pay. I think Colin Rogers' 1989 book is related.

Jared Bernstein gives the idea of a natural rate of unemployment at the first of four examples of ideas that [mainstream] economists have gotten wrong for decades. This is not the first example of a case where Post Keynesians (and only Post Keynesians(?)) could explain an empirical phenomenon decades in advance.

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