Non-Accelerating Inflation Rate Of Unemployment - NAIRU

DEFINITION of 'Non-Accelerating Inflation Rate Of Unemployment - NAIRU'

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. Unemployment Rate

    The percentage of the total labor force that is unemployed but ...
  2. Inflation

    The rate at which the general level of prices for goods and services ...
  3. Frictional Unemployment

    Unemployment that is always present in the economy, resulting ...
  4. Phillips Curve

    An economic concept developed by A. W. Phillips stating that ...
  5. Cyclical Unemployment

    A factor of overall unemployment that relates to the cyclical ...
  6. IRR Rule

    A measure for evaluating whether to proceed with a project or ...
Related Articles
  1. Economics

    Grading Janet Yellen

    Read a review of how Fed chairwoman Janet Yellen performed in her tenure as head of the Federal Reserve, and why it is more complicated than you think.
  2. Economics

    Examining The Phillips Curve

    This model depicts an inverse relationship between unemployment and wage inflation, but is it accurate?
  3. Retirement

    All About Inflation

    What causes inflation? How does it affect your investments and standard of living? This tutorial has the answers.
  4. Economics

    Explaining Economic Indicators

    Investors use economic indicators to gauge investment opportunities and judge the overall health of an economy.
  5. Credit & Loans

    Top 5 Reasons Why People Go Bankrupt

    The biggest cause of bankruptcy in the United States is medical expenses.
  6. Markets

    The (Expected) Market Impact of the 2016 Election

    With primary season upon us, investor attention is beginning to turn to the upcoming U.S. presidential election.
  7. Term

    How Statistical Significance is Determined

    If something is statistically significant, it’s unlikely that it happened by chance.
  8. Economics

    3 Charts All Investors Should See

    Given the abysmal start to the year, the defining question is whether this is another painful but temporary correction, or the start of a bear market.
  9. Economics

    3 Economic Challenges France Faces in 2016

    Learn about the three most significant economic challenges facing France in 2016. How will France implement reforms to improve its GDP and reduce unemployment?
  10. Investing

    2 Opportunities Amid Today’s Market Volatility

    As you prepare your portfolio for the market volatility ahead this year, here are a few investing ideas to consider.
RELATED FAQS
  1. Do plane tickets get cheaper closer to the date of departure?

    The price of flights usually increases one month prior to the date of departure. Flights are usually cheapest between three ... Read Full Answer >>
  2. Is Colombia an emerging market economy?

    Colombia meets the criteria of an emerging market economy. The South American country has a much lower gross domestic product, ... Read Full Answer >>
  3. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  4. What are the best free online calculators for calculating my taxable income?

    Free online calculators for determining your taxable income are located at Bankrate.com, TaxACT.com and Moneychimp.com. Determining ... Read Full Answer >>
  5. What economic indicators are important to consider when investing in the retail sector?

    The unemployment rate and Consumer Confidence Index (CCI) rank as two of the most important economic indicators to consider ... Read Full Answer >>
  6. What are some of the more common types of regressions investors can use?

    The most common types of regression an investor can use are linear regressions and multiple linear regressions. Regressions ... Read Full Answer >>
Hot Definitions
  1. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  2. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  3. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  4. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
  5. Dark Pool Liquidity

    The trading volume created by institutional orders that are unavailable to the public. The bulk of dark pool liquidity is ...
Trading Center