Technical Issues
Whatever the definition of full employment, it is difficult to discover exactly what unemployment rate it corresponds to. In the United States, for example, the economy saw stable inflation despite low unemployment during the late 1990s, contradicting most economists' estimates of the NAIRU.
The idea that the full-employment unemployment rate (NAIRU) is not a unique number has been seen in recent empirical research. Staiger, Stock, and Watson found that the range of possible values of the NAIRU (from 4.3 to 7.3% unemployment) was too large to be useful to macroeconomic policy-makers. Robert Eisner suggested that for 1956-95 there was a zone from about 5% to about 10% unemployment between the low-unemployment realm of accelerating inflation and the high-unemployment realm of disinflation. In between, he found that inflation falls with falling unemployment.
Worse, the NAIRU doesn't stay the same over time—and can change due to economic policy. For example, some economists argue that British Prime Minister Margaret Thatcher's anti-inflation policies using persistently high unemployment led to higher structural unemployment and a higher NAIRU.
Read more about this topic: Full Employment
Famous quotes containing the words technical and/or issues:
“When you see something that is technically sweet, you go ahead and do it and you argue about what to do about it only after you have had your technical success. That is the way it was with the atomic bomb.”
—J. Robert Oppenheimer (1904–1967)
“The “universal moments” of child rearing are in fact nothing less than a confrontation with the most basic problems of living in society: a facing through one’s children of all the conflicts inherent in human relationships, a clarification of issues that were unresolved in one’s own growing up. The experience of child rearing not only can strengthen one as an individual but also presents the opportunity to shape human relationships of the future.”
—Elaine Heffner (20th century)