Time to Ditch the Natural Rate?

We urge macroeconomists to abandon the ‘natural rate’ as an analytical device on the ground that it has become a source of great and growing confusion. But we press them to recognise that it has great potential as a policy tool provided we grasp the central idea of a hypothetical unemployment rate,...

Full description

Saved in:
Bibliographic Details
Published in:The Economic record 2003-09, Vol.79 (246), p.324-335
Main Authors: Hagger, A. J., Groenewold, Nicolaas
Format: Article
Language:English
Subjects:
Australia
Data analysis
Economic conditions
Economics
Employment
Government policy
Macroeconomics
Policy making
Studies
Time series
Unemployment
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We urge macroeconomists to abandon the ‘natural rate’ as an analytical device on the ground that it has become a source of great and growing confusion. But we press them to recognise that it has great potential as a policy tool provided we grasp the central idea of a hypothetical unemployment rate, which can be compared with the actual unemployment rate. We integrate three hypothetical unemployment rates with the help of an exploratory macro model and then present a quarterly series for each for Australia for the period 1986(2) to 1997(2). We explain how such series could help in policy‐making.
ISSN:0013-0249
1475-4932
DOI:10.1111/1475-4932.00107