The natural rate of unemployment

Where do we stand?

Olivier Blanchard in this paper reviews the macro and micro evidence against the natural rate of unemployment. He concludes that the evidence is “suggestive but not conclusive” and that “policymakers should keep the natural rate hypothesis as their null hypothesis but keep an open mind and put some weight on the alternatives.”
Should We Reject the Natural Rate Hypothesis?
Author: Olivier Blanchard
From: PIIE

Is it a “constant of nature”?

Edmund Phelps argues that the term “natural” is misleading because the natural rate of unemployment can be moved by structural factors such as demographics and technology or even people’s values and attitudes.
Nothing Natural About the Natural Rate of Unemployment
By: Edmund Phelps – Columbia University

On the contrary, Barnicho and Matthes find that in the US their estimated natural rate of unemployment has been remarkably stable within the range of 4.5{5e7f07e14add20b2e04f4edb85a447d3cd8121fc27b809645e9fed603c22cc5c} – 5.5{5e7f07e14add20b2e04f4edb85a447d3cd8121fc27b809645e9fed603c22cc5c} for the last 100 years.

The Natural Rate of Unemployment over the Past 100 Years
By: Regis Barnicho, Christian Matthes – Federal Reserve Bank of San Francisco

A historical digression

Friedman’s Presidential Address in the Evolution of Macroeconomic Thought
Authors: N. Gregory Mankiw, Ricardo Reis
From:Harvard University – London School of Economics