NY Fed researchers develop new natural rate of unemployment measure
Estimate is 50–60 basis points lower than other mainstream estimates
The natural rate of unemployment was roughly 3.9% at the end of 2018, based on a new measure developed by researchers at the Federal Reserve Bank of New York.
In a working paper, the researchers combine two traditional approaches to estimating the natural rate of unemployment. They use both data on labour market flows and a forward-looking Phillips curve.
Their figure is around 60 basis points lower than the Congressional Budget Office’s estimation, and 50bp lower than the projection from
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