Region Focus

First Quarter 2010

The New Normal? Economists ponder whether the "natural" rate of unemployment has risen

Economists often speak of a natural rate of unemployment that the economy tends to gravitate toward over the long run. But if the natural rate has risen lately, as some economists suspect, then unemployment may not fall anytime soon to the levels seen before the recent downturn.

Related Links

Ball, Laurence and N. Gregory Mankiw. "The NAIRU in Theory and Practice." Journal of Economic Perspectives, Fall 2002, vol. 16, no. 4, pp. 115-136.

Elsby, Michael, Bart Hobijn, and Aysegul Sahin. "The Labor Market in the Great Recession." Unpublished manuscript, March 2010.

Lacker, Jeffrey, and John Weinberg. "Inflation and Unemployment: A Layperson's Guide to the Phillips Curve." Federal Reserve Bank of Richmond Economic Quarterly, Summer 2007, vol. 93, no. 3, pp. 201-227.

Rissman, Ellen. "Employment Growth: Cyclical Movements or Structural Change?" Federal Reserve Bank of Chicago Economic Perspectives, Fourth Quarter 2009, pp. 40–57.

Rudebusch, Glenn and Zheng Liu. "Inflation: Mind the Gap." Federal Reserve Bank of San Francisco Economic Letter, 2010-02, January 19, 2010.

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