> On Nov 18, 2006, at 4:04 PM, tfast wrote:
>
> > My personal favorite is the claim that "the natural rate hypothesis
> > has
> > strong empirical support." It damn well should given it is
> > defined as
> > close to whatever the existing rate of unemployment happens to be.
>
> Yeah, it keeps moving around. Reminds me of those hardy monetarists,
> who are like those old Japanese soldiers hiding in trees who wouldn't
> believe the war was over, mutter about "long and variable lags."
>
> Doug
>
Here is a new term "Functional Level of Unemployment" or FLU for short. Let
us define the FLU as existing about or around the actual rate of
unemployment with a floor of 5% in the US and 6.5% in Canada and suggest
that anything below that rate requires monetary tightening to induce just
enough flexibility into wage demands such that accumulation can resume
apace. Anything above those rates defines a space where workers are too
tired and to insecure to demand higher wages. Kinda of like having the FLU.
You will find a good deal of empirical support for this hypothesis:)
Travis
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