NAIRU, State-Varying Behavior and Optimal Lag Selection
نویسندگان
چکیده
Due to empirical failures, researchers recently have suggested that the inflationunemployment relationship associated with the natural rate of unemployment (NAIRU) should be characterized by more complex dynamics and/or highly nonlinear, switching regimes associated with contractions and expansions. This paper investigates empirically both the appropriate specification of the dynamics of the NAIRU model employing optimal lag selection techniques, and the effect of the state of the economy or labor market on the inflation-unemployment relationship. The empirical evidence suggests no need to specify switching régimes, if the dynamics is specified appropriately in a simple linear model.
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