TY  - JOUR
AU  - Staiger,Douglas
AU  - Stock,James H.
AU  - Watson,Mark W.
TI  - Prices, Wages and the U.S. NAIRU in the 1990s
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8320
PY  - 2001
Y2  - June 2001
UR  - http://www.nber.org/papers/w8320
L1  - http://www.nber.org/papers/w8320.pdf
N1  - Author contact info:
Douglas O. Staiger
Dartmouth College
Department of Economics
HB6106, 301 Rockefeller Hall
Hanover, NH 03755-3514
Tel: 603/646-2979
Fax: 603/646-2122
E-Mail: douglas.staiger@dartmouth.edu

James H. Stock
Department of Economics
Harvard University
Littauer Center M27
Cambridge, MA 02138
Tel: 617/496-0502
Fax: 617/495-7730
E-Mail: James_Stock@harvard.edu

Mark W. Watson
Department of Economics
Princeton University
Princeton, NJ 08544-1013
Tel: 609/258-4811
Fax: 609/258-5533
E-Mail: mwatson@princeton.edu
AB  - Using quarterly macro data and annual state panel data, we examine various explanations of the low rate of price inflation, strong real wage growth, and low rate of unemployment in the U.S. economy during the late 1990s.  Many of these explanations imply shifts in the coefficients of price and wage Phillips curves.  We find, however, that once one accounts for the univariate trends in the unemployment rate and in the rate of productivity growth, these coefficients are stable.  This suggests that many explanations, such as persistent beneficial supply shocks, changes in firms' pricing power, changes in price expectations arising from shifts in Fed policy, and changes in wage setting behavior miss the mark. Rather, we suggest that explanations of movements of wages, prices and unemployment over the 1990s, and indeed over the past forty years, must focus on understanding the univariate trends in the unemployment rate and in productivity growth and, perhaps, the relation between the two.
ER  -