Yves hers. Since many of you seemed to like Diptherio’s last podcast, we thought we’d give you his latest installation. This edition covers NAIRU, or the Non-Accelerating Inflation Rate of Unemployment.
The discussion is deliberately at a generalist level, so most of you will already know this terrain well. Nevertheless, it can serve as a helpful introduction to friends and colleagues, as well as illuminating the basis for the Fed’s aggressive position on inflation. One obvious point which does not fit into this discussion’s framework: economists frame wages at the big potential driver of cost increases, when for manufactured goods, direct factory labor (which are in the class of worker most exposed to macroeconomic swings) is a small percentage of total product cost. By contrast, the NAIRU framing leads economists to obsess over unemployment levels (with the new “structural” level curiously higher than in the 1960s, when workers were less mobile than now) and ignore the roles of monopolies and oligopolies.
As before, Diptherio welcomes your feedback!