Non-Accelerating Inflation Rate Of Unemployment - NAIRU

What is the 'Non-Accelerating Inflation Rate Of Unemployment - NAIRU'

The non-accelerating inflation rate of unemployment (NAIRU) is the specific level of unemployment that exists in an economy that does not cause inflation to increase. The non-accelerating rate of unemployment (NAIRU) often represents an equilibrium between the state of the economy and the labor market.

NAIRU is also sometimes referred as a "long-run Phillips curve".

BREAKING DOWN 'Non-Accelerating Inflation Rate Of Unemployment - NAIRU'

For example, suppose that the unemployment rate is at 5% and the inflation rate is 2%. Assuming that both of these values remain the same for a period of years, it can be said that when unemployment is under 5%, it is natural for an inflation rate of 2% to correspond with it.

Critics cite that it is unlikely to have a static rate of unemployment that will last for long periods of time, because different levels of factors affecting the workforce and employers (such as the presence of unions and monopolies) can quickly shift this equilibrium.

RELATED TERMS
  1. Natural Unemployment

    The lowest rate of unemployment that an economy can sustain over ...
  2. Underemployment Equilibrium

    A condition where underemployment in an economy is persistently ...
  3. Unemployment

    Unemployment occurs when a person who is actively searching for ...
  4. Unemployment Rate

    The percentage of the total labor force that is unemployed but ...
  5. Phillips Curve

    An economic concept developed by A. W. Phillips stating that ...
  6. Continuing Claims

    Continuing claims refers to unemployed workers that qualify for ...
Related Articles
  1. Economics

    Understanding the Unemployment Rate

    The unemployment rate is the percentage of people in the labor force who are unemployed but seeking a job.
  2. Retirement

    Why Unemployment Rates Matter To Your Retirement

    Undoubtedly, unemployment is important for retirees and soon-to-be retirees. Also important is understanding the inflation rate as it’s reporting by the US.
  3. Economics

    How The Unemployment Rate Affects Everybody

    Depending on how it's measured, the unemployment rate is open to interpretation. Learn how to find the real rate.
  4. Economics

    What Qualifies as Full Employment?

    Full employment is an economic term describing a situation where all available labor resources are being utilized to their highest extent.
  5. Economics

    The True Unemployment Rate: U6 Vs. U3

    Learn how to distinguish between the U-3 and U-6 unemployment rates, and explore which rate provides a truer picture of unemployment.
  6. Personal Finance

    No Paycheck Doesn't Necessarily Mean No Income

    If you lose your job, be sure to apply for unemployment benefits. It's not welfare, but an insurance program that you and your employer have already paid into.
  7. Fundamental Analysis

    What Causes Inflation in the United States

    Inflation is the main catalyst behind U.S monetary policy. But what causes this phenomenon of sustained rising prices? Read on to find out.
  8. Personal Finance

    Unemployment Benefit Changes Coming Soon

    Here's a rundown of how the intended changes to unemployment benefits in the U.S. will affect U.S. citizens.
  9. Investing News

    Swedish Economy Will Outperform in 2016

    I expect the Swedish economy to post another strong year in 2016.
  10. Options & Futures

    Recession 2009: By The Numbers

    During a recession there are a lot of numbers thrown around. Find out what those economic statistics really mean.
RELATED FAQS
  1. Do rising unemployment rates tend to increase or decrease investor sentiment and ...

    Discover whether rising unemployment rates tend to increase or decrease consumer confidence and investor sentiment. Unemployment ... Read Answer >>
  2. Unemployment resulting from changes in the basic composition of the economy ... ...

    The correct answer is a. An example of structural unemployment is the technological revolution. Computers might have eliminated ... Read Answer >>
  3. What is the difference between structural unemployment and cyclical unemployment?

    Learn more about unemployment in an economy, what structural and cyclical unemployment are, and the differences between these ... Read Answer >>
  4. How does the U.S. Bureau of Labor Statistics calculate the unemployment rate published ...

    Understand the process used by the U.S. Bureau of Labor Statistics to determine the official unemployment rate for the United ... Read Answer >>
  5. What is the difference between frictional unemployment and structural unemployment?

    Learn about structural unemployment and frictional unemployment, the differences between the two types and their main characteristics. Read Answer >>
  6. When does cyclical unemployment become structural unemployment?

    Learn about the conditions under which cyclical unemployment becomes structural unemployment. Find out more about the relationship ... Read Answer >>
Hot Definitions
  1. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  2. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  3. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  4. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  5. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  6. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
Trading Center