NAWRUNon-Accelerating Wage Rate of Unemployment
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donde [N.sub.t] es la poblacion activa y [[bar.U].sub.t] la Nawru.
The paper is structured as follows: the next section outlines indicators of wage inflation and unemployment since 1980 which suggest that a priori that labour market structural conditions have changed over the period implying that the NAWRU could not have been constant for the duration to 2005.
The Phillips curve can be used to recover the NAWRU as an unobserved component using the Kalman Filter.
During the last years of the period, however, employment grows somewhat more slowly than in the main scenario, and unemployment turns slightly upward (see Diagram 118); this development is consistent with a gradual return of NAWRU towards its original level.
(16.) In practice, the choice between wage or price inflation does not appear to radically alter the results, although the use of price inflation represents a change from previous OECD estimates which relate to wage inflation and hence the NAWRU. For most countries the chosen inflation indicator was based on the private consumption deflator.
The OECD's NAWRU method, see Elmeskov and McFarland (1993) and Elmeskov (1994), can also be easily understood using main course unemployment.
(9.) The Norwegian authorities estimate the NAWRU as between 3 1/2 and 4 per cent.
Structural unemployment data are based upon estimates of the non-accelerating wage rate of unemployment (NAWRU).
Empirical treatments often identify it with that rate of unemployment which, in an inflation-expectations-augmented Phillips curve, serves to stabilize the inflation rate (hence the alternative acronyms, non-accelerating inflation rate or nonaccelerating wage inflation rate--NAIRU or NAWRU).
On the other hand, beyond the immediate business cycle perspective, a balanced representation of risks depends importantly on judgements about the level of excess capacity (output gap), the NAWRU and the underlying growth rate of the economy, about all of which there is considerable uncertainty (see Box 1).
Most recent studies put estimates of unemployment consistent with stable wage inflation (NAWRU) at around 6 per cent, broadly unchanged from estimates established for the mid-1980s.
The decline in unemployment to near the OECD Secretariat's estimate of the non-accelerating wage rate of unemployment [TABULAR DATA FOR TABLE 5 OMITTED] (NAWRU) is expected to contribute to a small rise in wage pressures owing to speed limit effects.