> Ellen Frank wrote:
>
> >A problem I have with some of the anti-NAIRU literature is that it has
> >thrown the proverbial baby out in its efforts to critique the
> >natural rate of unemployment idea. You can dispute the inotion
> >that unemployment is "natural" without wholesale rejection of any
> >connection
> >between growth/ low unemployment and inflation.
> >Obviously, a one-to-one relationship between growth// inflation is
> >difficult to establish, since so much
> >depends on the wage-setting and price-setting
> >institutions in a country, but its a pretty plausible relationship, all
> >in all.
>
It's important to distinguish between the NAIRU and the old Phillips curve. The PC is an old Keynesian idea. Crucial to the NAIRU is the "accelerationist hypothesis," as Joe Stiglitz called it in the passage I posted yesterday. And as Stiglitz wrote, the empirical evidence on the AH is "unambiguous": it's wrong. So the NAIRU must be wrong, too.
Seth