TY  - JOUR
AU  - Ball,Laurence
AU  - Mankiw,N. Gregory
TI  - The NAIRU in Theory and Practice
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8940
PY  - 2002
Y2  - May 2002
UR  - http://www.nber.org/papers/w8940
L1  - http://www.nber.org/papers/w8940.pdf
N1  - Author contact info:
Laurence M. Ball
Department of Economics
Johns Hopkins University
Baltimore, MD 21218
Tel: 410/516-7605
Fax: 410/516-7600
E-Mail: lball@jhu.edu

N. Gregory Mankiw
Department of Economics
Littauer 223
Harvard University
Cambridge, MA  02138
Tel: 617/495-4301
Fax: 617/495-7730
E-Mail: ngmankiw@fas.harvard.edu
AB  - This paper discusses the NAIRU -- the non-accelerating inflation rate of unemployment.   It first considers the role of the NAIRU concept in business cycle theory, arguing that this concept is implicit in any model in which monetary policy influences both inflation and unemployment.  The exact value of the NAIRU is hard to measure, however, in part because it changes over time.   The paper then discusses why the NAIRU changes and, in particular, why it fell in the United States during the 1990s.  The most promising hypothesis is that the decline in the NAIRU is attributable to the acceleration in productivity growth.
ER  -