The non-accelerating inflation rate of unemployment NAIRU in a small open economy: The irish context Report as inadecuate




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Abstract

In Ireland the link between real disequilibrium such as the unemployment gap and inflation either price or wage is blurred by external factors, operating through traded goods price inflation. Attempts to extract information about the unobservable NAIRU from aggregate inflation measures, such as the HICP or wages inflation, are likely to be swamped by these external factors. This paper uses a measure of ‘domestically generated’ inflation defined as the gap between the services inflation rate and the goods inflation rate, to capture domestic inflationary pressuresarising from the labour market. A strong relationship is seen to exist between ‘domestically generated’ inflation and labour market tightness. The results also suggest that the NAIRU may not have varied significantly since 1979, despite the large movements in unemployment over the sameperiod.



Item Type: MPRA Paper -

Original Title: The non-accelerating inflation rate of unemployment NAIRU in a small open economy: The irish context-

Language: English-

Keywords: Ireland; unemployment ;inflation ;traded goods ;NAIRU domestically generated inflation-

Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; DeflationE - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor ProductivityC - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C62 - Existence and Stability Conditions of Equilibrium-





Author: Meyler, Aidan

Source: https://mpra.ub.uni-muenchen.de/11363/







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