Monday, 13 June 2016
Silly attack on NAIRU by Lars Syll.
I nearly always agree with Lars, but not with this criticism he makes of NAIRU. Basically he just plays the old straw man trick: he attributes a characteristic to NAIRU which just isn’t there in dictionary or text book definitions of the concept.
To be more exact he claims NAIRU is a “timeless long-run equilibrium”. Well NO IT’S NOT!! That is, advocates of the NAIRU concept make it perfectly clear that the level of unemployment at which inflation rises too much or “accelerates” can vary with a whole host of factors: changing skill levels of the workforce, changing patterns of supply and demand which will make some skills obsolete, and so on.
And in case you’re wondering why I haven’t left the above two paragraphs on his blog in the form of a comment, reason is that his blog is powered by Wordpress which I’ve found over the last few years to be a constant pain in whatsit. Leaving comments on his blog seems to be impossible.